Suraya Ismail of the Khazanah Research Institute (KRI) said this could improve the efficiency of the housing market.

She said currently the “median multiple”, commonly used to measure affordability by comparing the price of the property with the median household income, does not take home financing into account.

For instance, a house that costs five times the median income of RM600,000 is still considered “affordable” when a longer loan tenure is offered to the buyer.

“It gives the impression that you are getting a good deal although you are buying an expensive home,” she said at a webinar on “The finalisation and commodification of our homes” today.

In the end, she said it only made the homeowner more indebted.

“If houses are truly affordable, we would not have this problem.”

According to a KRI study, “The financialisation of our lives: values and trade-offs”, the rapid increase in prices, through innovative financing schemes, has created a housing bubble because prices do not reflect the real worth of properties.

Meanwhile, Bank Negara Malaysia financial surveillance department director Daniel Chin warned of drawbacks in terms of affordability for loans with tenures that are too long or short.

Ultimately, he said the role of financing is to support long-term affordability and ensure financing terms are sustainable, for both the borrower and the economy.

He said loan tenures had some time ago crept beyond 40 years and even 45 years. “It was then that we decided to cap it at 35 years.”

Chin said the “sweet spot” for borrowers is 25 to 35 years, which corresponds with the borrower’s life cycle.

Given that financial education is essential to ensure informed choices, he urged borrowers to sit through the “Rumahku” course by the Credit Counselling and Debt Management Agency (AKPK), which is available free of charge on its website.