Authorities Want to Lower Interest Rate for Housing Loans

Pavither January 30, 2018

In order to help Malaysians intending to buy their first house and existing homeowners, the Federal Government announced recently that it plans to suggest a lower interest rate for housing loans to the central bank.

According to Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi, the proposal forms part of the National Housing Policy 2.0. This also include a review of the temporary ban on luxury properties costing RM1 million and above that was introduced last November.

“If possible the housing loan interest rate should be low enough that it is very competitive but at the same time does not impact the national economy negatively.”

However, Bank Negara Malaysia (BNM) said on Thursday that it plans to raise its overnight policy rate (OPR) by 25 basis points to 3.25 percent. This represents its first hike since July 2014, and is expected to increase the interest rate of mortgages granted in the country.

Another rationale behind Putrajaya’s proposal to lower the interest rate for housing loans is that while Malaysia’s mortgage rate of 4.65 percent is lower than Australia’s 5.3 percent, it is still higher than Singapore’s 1.65 percent.

The difference is considerable given that about 65.17 percent or 8,050 houses costing between RM250,000 and RM500,000 remain unsold, based on a 2017 research from the National Property Information Centre (NAPIC).

Meanwhile, the government wants to get a clearer and more comprehensive understanding of the local housing market so that it can make more accurate decisions.

“(But) this requires the development of big data analytics,” said Zahid during the high-level committee meeting on housing held in Putrajaya on Thursday.

Other proposals to help the property sector that were mentioned during the meeting include providing incentives and exemptions to home builders, as well as introducing mechanisms to control prices and prevent speculation.

Aside from implementing rent-to-own scheme for public housing tenants, they also discussed the creation of a Public Housing Management Body for People’s Housing Projects.

Furthermore, the central bank recommended the establishment of a special coordinating task force to look into end-financing for home buyers.

“The bridging financing directly given by financial institutions is largely settled. It is the end-financing which we need to resolve,” Zahid added.

Image sourced from Malay Mail

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