Sarawak disagree to allow housing developer giving loans

 |Sep 22, 2016
He said the move may also increase the cost of end-financing, distract developers from carrying out their core business, as well as expose them to borrower default risk over the long-term especially if the homebuyers' credit-worthiness is an issue.
He said the move may also increase the cost of end-financing, distract developers from carrying out their core business, as well as expose them to borrower default risk over the long-term especially if the homebuyers’ credit-worthiness is an issue.

Sarawak would not adopt the move by the Ministry of Urban Wellbeing, Housing and Local Government to allow private housing developers to give loans to homebuyers.

Deputy Chief Minister Abang Johari Tun Abang Haji Openg said this is because such a move could pose financial risks to the developers as the scheme may not be sustainable in the long-term.

He said the move may also increase the cost of end-financing, distract developers from carrying out their core business, as well as expose them to borrower default risk over the long-term especially if the homebuyers’ credit-worthiness is an issue.

“To ensure responsible lending, it would be better and more prudent for the perspective house buyers to secure their loans from established banks and financial institution,” he said in a press conference at the Land Custody and Development Authority (PELITA) office at Wisma Satok, here today.

On Sept 8, Minister for Urban Wellbeing, Housing and Local Government Noh Omar announced that property developers could now apply to the ministry for a money-lending licence for housing loans of up to 100 per cent of a property’s value, as it would provide an additional financing source for borrowers who may not qualify for a bank loan.

The Cabinet was briefed on the programme on Sept 14 after some of Noh’s colleagues expressed reservations over it, and later Noh said he had been asked to adjust the plan to avoid misuse, but it was not being abandoned.

Abang Johari said in Sarawak, to address the end-financing problem affecting housebuyers, the state government has set up Mutiara Mortgage and Credit Sdn Bhd, a fully-owned subsidiary of the Housing Development Corporation (HDC), to provide loans to the low-income group, and currently it focuses on loans to public housing project under the Public Housing Program (PPR) and HDC’s own affordable housing projects.

“This lending agency would be a better alternative for those prospective housebuyers who have difficulty in securing loans from banks. However, Mutiara Mortgage and Credit Sdn Bhd will follow the bank loan management standards in processing the loan applications while giving some flexibility to deserving and qualified applicants,” he said.

He said the government will also continue to intensify its efforts towards implementing public initiatives such as PR1MA projects, PPR, 1Malaysia Civil Servants Housing Program, People Friendly Housing Scheme and MyHome Program.

He cited that the state government would also be providing land for the development of future affordable housing projects through HDC and Borneo Development Corporation.

Source: Bernama