THE Housing and Local Government Ministry is expected to introduce six new home loan schemes in mid-October, after the central bank announced its decision to ease home lending rules effective Sept 1.

Minister Zuraida Kamaruddin (picture) said the government is in the final stage of discussion to make more end-financing options available for low-income groups in line with the federal administration’s target to build one million affordable homes.

“We would have six different schemes with participation from about 15 different financial institutions like Cagamas Bhd, commercial banks and investors who will be offering various financing models like rent-to-own schemes,” Zuraida told reporters in Putrajaya yesterday.

Earlier in March, the ministry launched the FundMyHome+DepositKu scheme to help alleviate the burden for first-time homebuyers.

Under FundMyHome, buyers can own a home without the need for a mortgage and monthly repayments by paying 20% of the purchase price, while the balance 80% is contributed by participating institutions, which share the returns from changes in the future value of the home.

Under DepositKu, first-time homebuyers can opt for a loan of up to RM30,000 to be repaid after five years, accounting for part of the 20% payment to own a home under FundMyHome.

Meanwhile, Finance Minister Lim Guan Eng, who had earlier led a Budget 2020 Focus Group Meeting on affordability of housing, said Bank Negara Malaysia’s (BNM) move to loosen mortgage rules is expected to spur home loan applications by a further 20%.

He added that BNM’s revised criteria for its RM1 billion Fund for Affordable Homes — which has been expanded to include a maximum household income of RM4,360 from RM2,300 previously and an extension of the repayment duration to 40 years from 30 years — will reduce monthly instalment payment by 20%.

“If monthly instalment payment can be cut by 20% per month, we hope there will be an increase of 20% in home loan applications.

“But this, of course, will be subjected to the financial capacity of the applicants,” Lim said.

In announcing the change to BNM’s loan standards for affordable homes on Wednesday, BNM assistant governor Adnan Zaylani Mohamad Zahid said a total of 296 applications worth RM31 million have been approved under the fund as at the end of June 2019.

The fund was made available from Jan 2 for two years or until the RM1 billion allocation is fully utilised.

He said a total of 700 applications were received during the first six months of the year, of which, 390 have been processed and 296 were approved, setting the approval rate at 76%. Ninety-four applications were rejected due to affordability issues.

In May, applications for mortgages had reached a total of RM25.6 billion, almost a six-year high and a 36.6% increase from RM18.74 billion recorded a year before.

However, industry experts said the sudden surge, which was attributed to lower interest rates and the nationwide Home Ownership Campaign, might not be an indication that the country’s RM19.96 billion property overhangs could be cleared up.

On a separate note, both Lim and Zuraida denied that talks were held with ministers on the possibility of a Cabinet reshuffle or rumours of the appointment of Datuk Seri Mustapa Mohamed as a federal minister.

The Star, quoting sources, had earlier reported that Prime Minister Tun Dr Mahathir Mohamad made an announcement during the Cabinet meeting on Aug 21 that several ministers will see a change in their portfolios. However, the line-up of ministers will remain the same.

News Source: The Malaysian Reserve, 23 August 2019