80% mortgage cap on housing loan......

PETALING JAYA: Several groups are up in arms over a proposal to cut housing loans by 10% from the current cap of 90%, saying that the move will only discourage Malaysians from buying houses.

National House Buyer’s Association (HBA) and Federation of Malaysian Consumers Associations (Fomca) cautioned that the proposed home loan reduction to 80% would only be a burden to potential house buyers.

HBA honorary secretary-general Chang Kim Loong said the proposal would go against the Government’s plans to encourage home ownership.

“Young professionals who are just starting out will be deprived of buying a home for themselves. How are they going to get the 20% upfront payment?

“That does not include the legal fees and stamp duties house buyers have to pay,” said Chang when contacted yesterday.

He said the move would only be good if it targeted high-end buyers, as an effort to deter speculation.

On Sept 2, StarBiz reported that Bank Negara was engaging with banks on possible measures to curb excessive speculation on property prices.

One of the measures discussed was whether the central bank will be capping the loan-to-value ratio (LVR) for mortgages at 80% in order to avert the risk of a potential property bubble.

Currently, most banks provide loans of up to 90% of the value of the property.

Fomca secretary-general Muhd Sha’ani Abdullah urged the Govern­ment to ensure there was enough affordable housing available first before implementing such proposals.

“40% of the workforce earn up to RM1,500 a month. If this proposal were to be implemented across the board, how are they going to afford houses?” he asked.

Gerakan vice-president Datuk Mah Siew Keong said that if the proposal was applied across the board, the property market, construction industry, housing and real estate industry, and economic growth would slow down.

“Bank Negara must study the plan carefully, as the present limit of home loans of 90% has helped the housing and real estate industry,” said Mah, who is also the party’s economic development bureau chairman in a statement.

Housing and Local Government Minister Datuk Chor Chee Heung, however, said the measure would not dampen the housing market as in the long-term, it would actually be a healthy growth for the industry.

Banking sources said Bank Negara might consider discontinuing the 5:95 and 10:90 housing loan packages and impose higher downpayment for property purchasers.

This was due to a surge of between 10% and 30% in the price of landed properties in some parts of the Klang Valley and Penang.

By ONG HAN SEAN
hansean@thestar.com.my

Taken from THE STAR recently.

My initial thoughts, it will be more difficult to own properties for some if this is to be implemented. Some couldn't even manage to pay the 10% downpayment and now they want us to pay 20%? How could a young, recently graduated person afford to have such amount? Not everybody were born with silver spoon in their mouth. However, I heard that such cap is only for properties that are more then RM500k and above. Perhaps, it's a good move as not everyone in Malaysia can afford to buy a property that's worth more then RM500k.

In fact, buying a property in Klang Valley is a monumental task for some. Only the selected few are managed to do that especially buying landed properties. To be honest, I would love to buy a landed property but the prices of such properties has gone way beyond what my wife and I can afford....Of course, I'm writing based on what I read in the news. Maybe, there's a strong reason why Bank Negara would want to impose such conditions. Perhaps, one of the reasons is to reduce property prices speculations.

Anyhoos, everything seemed to be on the discussion stage. The authorities, whoever they are, please put the rakyat first and foremost. We don't want to be part of a generation that has no assets to be passed on to our children in the future.