Government proposes to cut housing loan interest rates
A proposal which would reduce housing loan interest across banks nationwide is expected to be presented to the Cabinet soon, announced Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi, today.
The proposal which will ease the financial burden of those applying for house loans, he said, was initially tabled by the National Housing Department and would need the approval of the Cabinet and Bank Negara Malaysia (BNM) for it to go through.
“Once the Cabinet provides the green light to the proposal, BNM is expected to meet representatives of commercial banks for further discussion and finalisation.
“One of the reasons why many housing units remain unsold is not just due to the glut but the inability of the people to secure proper financing with the banks,” he told reporters after chairing the High-Level Committee (HLC) on Housing at the Prime Minister’s Office here.
Also present were Urban Well-being, Housing and Local Government Minister Tan Sri Noh Omar, and his deputy Datuk Halimah Mohamed Sadique.
At present, he pointed out that 65.17% or 13,605 homes that cannot be sold are priced between RM250,000 to RM500,000.
“Following some research in comparison with other countries in terms of housing loan interests, we are ranked in the middle.
“I hope that a competitive interest rate for housing loans can be implemented and complied by all commercial banks to reduce the burden of house buyers.
“BNM has the authority to compel them under its Banking and Financial Institutions Act 1989. However, the final decision on the matter lies with the Federal Government and the Prime Minister,” he added.
The HLC meeting, also reached a consensus that the government will review the freeze on the development of luxury properties worth more than RM1 million per unit.
He said this was necessary as more data on the housing situation in the country is needed.
“Only then can the real situation in the country be assessed for the correct decision to be made,” he noted.
Alternatively, Ahmad Zahid said house buyers who fail to secure a loan at present will be aided through the Rent-To-Own scheme, as well as the introduction of the National Public Housing Management Board (3P), to overcome the issue involving the management and allocation of the People’s Housing Project (PPR) nationwide.
On Nov 19, last year Second Finance Minister Datuk Seri Johari Abdul Ghani said the Cabinet decided to freeze the construction of condominiums and commercial premises worth RM1 million and more to offset the supply and demand of real estate in the country.
This came about after scrutinising a Bank Negara report that there was an overflow of luxury projects which had outstripped the market demand for affordable homes.
Johari said the freeze would be temporary, to review development strategies so that it does not affect the country’s economy.
BNM had earlier reported that there were 130,690 unsold residential property units in the first quarter of 2017, with 83% of these unsold units being in the above the RM250,000 price category indicating supply-demand imbalances in the property market.
Meanwhile, the news comes as BNM’s Monetary Policy Committee raised the Overnight Policy Rate (OPR) by 25 basis points to 3.25% signalling a possible 0.25% percentage point increase in lending rates.
An increase in rates will mean higher monthly instalments for housing loans.
Whether or not banks increase lending rates is very much at the discretion of the bank, as each bank offers a different base rate and base lending rate determined by not only the OPR, but also its own cost of funding.
BNM said in a statement, that with the OPR hike, the floor and ceiling rates of the corridor for the OPR are correspondingly raised to 3% and 3.50%, respectively.