First time home buyers will continue to have access to finance.
In response to recent reports regarding requests to review Bank Negara Malaysia’s lending guidelines, the bank said first time home-owners will continue to have access to financing.
In a statement it said outstanding housing loans continued to expand at double digit levels, recording a growth of 10.6 percent as at the end of May 2016.
About 75 percent of borrowers with housing loans are first time house buyers.
“We wish to state that access to credit is not the problem confronting potential buyers in owning affordable houses,” the statement said.
“There are more fundamental issues that require resolution such as affordability and shortage of supply of reasonably priced houses.”
The responsible financing guidelines serve to ensure that individuals borrow within their capacity to repay the borrowings.
It places a responsibility on banks to establish a borrower’s income that will be available to meet debt repayments, after allowing for expenditures and contingencies.
It said this is to protect and prevent individuals from falling into financial hardship due to over borrowing, which ultimately undermines home ownership as a result of foreclosures.
Bank Negara Malaysia does not prescribe any lending limits, it said.
Lending decisions continue to be determined by a bank’s business decision, reflecting its risk appetite and strategies.
As a general rule all first time home buyers applicants who fulfill the credit criteria and can afford to repay the debt will have access to credit.
The bank, Agensi Kaunseling dan Pengurusan Kredit and Association of Banks in Malaysia are continuing to engage with state authorities to improve the process for approving applicants for affordable homes to ensure that they will also be eligible for bank financing.
This includes helping individuals identify the steps that they can take to improve their eligibility for financing, the statement concluded.