Penang Rehda unhappy over high rejection rate for housing loans

Penang Real Estate and Housing Developers Association (Rehda) branch immediate past chairman Jerry Chan.

GEORGE TOWN: A property developer has raised doubts over reports that the high home loan rejection rate is a result of a rise in the number of defaulters.

Jerry Chan, former chairman of the Penang Real Estate and Housing Developers Association (Rehda), said reports about high default rates could be an exaggeration as it has “not gone up very much”.

In Malaysia and other countries in Asia, many regard home ownership as paramount and repaying loans for it as “critical and high priority”, he said.

While it can’t be denied that there are defaulters, the number is small and there were many paying loans on time, he said.

Chan said banks also cannot be hard and fast about loans by only considering the “official income”.

He said “resourceful” Malaysians also rely on side incomes through commissions from businesses, part-time jobs and even working as ride-hailing drivers.

“Banks should not just say, ‘okay here’s your income tax slip, we will deduct so much for your living expenses, and the remainder is what you can afford to service your home loan’.

“If it works that way, can the banks explain why some people who are technically unable to pay their home loans are able to do so, despite having stricter lending measures put in place?

“Banks should make housing loans easier to obtain and provide the loans the purchaser requires. If the buyer wants to pay a certain sum per month, he or she will work very hard to meet that obligation.

“I think it is time for banks to show us facts and figures on how well they are doing in terms of housing loan repayments and why they are being too strict in lending to people,” Chan said.

Last week, Penang Rehda had said there has been a glut of new homes priced below RM300,000 and attributed this to the high loan rejection rate by banks.

Property developers blame the 35-year limit by the central bank as the key reason for high loan rejection rates.

Recently, the government said the rejection rate by banks was at 70%, with news reports indicating this was due to high default rates.

Data from the Malaysia Department of Insolvency show that defaults on housing loan ranked second after car loan defaults in 2010, 2011 and 2013.

According to the department, seven people had gone bankrupt daily in 2015 after being unable to service their housing loans.

On a different note, Chan said the developers in Penang hoped the state government would honour their promise to reduce development costs.

He said the developers had been paying very high costs, comprising development charges, contribution for public infrastructure and more, over the years. This has led to developers passing all these compliance costs to property buyers.

“We are surprised that the move to reduce these compliance costs by the Penang government has not been realised, despite repeated announcements before.”

Chan, together with Penang Rehda chairman Toh Chin Leong, attended the opening of the Malaysia Property Expo (Mapex) 2019 at the Udini Square in Gelugor.

First-time home buyers at the Mapex will get a 10% discount on homes and waivers on stamp duties for properties up to RM300,000. The offer is up to Dec 31, 2020.

Recently, Bank Negara Malaysia launched a RM1 billion fund for the lower-income group to buy their first home at below RM150,000.

Loans are tied with commercial banks at an interest rate of 3.5% and a maximum tenure of 40 years.