By December 2, 2011 0 Comments

Slow response to My First Home loan

The number of people applying for loans under the government’s “My First Home Scheme” has been small so far, say sources, citing the strict lending criteria and the ongoing debate over raising the household income limit eligibility and the ceiling price of houses under the scheme which is causing confusion among home buyers.

“Since the scheme was launched last March, the number of loans approved has been less than 10 a month. The slow response has been partly attributed to the stringent requirements which make it hard for borrowers to get the loans,” said a banking executive who requested anonymity.

Sources said the ongoing revisions to the scheme are also causing confusion among home buyers.

Deputy Finance Minister Datuk Donald Lim Siang Chai was quoted recently as saying that the government is looking at raising the household income limit eligibility for the scheme to RM7,000 from RM3,500 now.

This was in line with the announcement by Prime Minister Datuk Seri Najib Razak in Budget 2012, of raising the loan limit under the scheme to RM400,000 from RM220,000 starting January 2012.

CIMB Bank head of retail financial services Peter England said response to loans under the scheme has been a little slower than expected. “But we expect this to pick up in the future when the maximum house price under the scheme increases,” he told SunBiz.

Being one of the 26 financial institutions involved in the programme, England said the bank’s branches and frontline staff have been briefed and are well aware of the scheme.

“In relative terms, this (loans under My First Home Scheme) may not be a major part of our business. However, this is an under-served market segment which we can tap into. CIMB Bank will actively support such initiatives as part of our overall contribution to the Malaysian economy, and playing our part in helping lower-income groups build their future financial security,” he added.

To be eligible, borrowers must meet certain criteria set by Cagamas Bhd, such as they must be a first-time house buyer, a Malaysian not more than 35 years old at the point of financing application, have a household income of not more than RM3,000, house purchase price ranges from RM100,000 to RM220,000 and the maximum repayment period is 30 years.

The property must also strictly be for own occupation by the borrower or the principal/main joint borrower.

“Firstly, the loan must meet the criteria established by Cagamas, and after that we apply our own criteria as per the bank’s policies and guidelines,” said England.

“As per criteria set by Cagamas, there is no preference for those who are married, with children, or those seeking shorter repayment tenure.
Emphasis is for first-time home buyers and those with monthly household income of RM3,000 and below.

“Self-employed borrowers are not eligible,” he said, adding that joint applications are allowed.

Malayan Banking Bhd (Maybank) deputy president and head of community financial services, Lim Hong Tat, said it has received a “good number” of enquiries from the public on the scheme’s loans, but declined to reveal the figures for competition reasons.

“Our aim is to fully support the government’s initiative under this programme to promote first home ownership among young urban adults who have just joined the workforce and currently drawing a salary not exceeding RM3,000 per month.

“With the proposed increase in property value cap for this programme, mainly to cater to applicants working in the Klang Valley where property prices are typically much higher than other areas, there will be more property choices available and with the proposed increase in maximum monthly income ceiling, the housing loan repayment to gross income ratio will be much improved,” said Lim.

For Maybank, Lim said there are no specific preferences, although its focus is on properties in urban, stable to prime areas across the country priced from RM100,000 to RM300,000.

“Eligible applicants will be subject to the bank’s standard credit evaluation to determine the loan repayment capability for housing loan approval,” he added.

Via : THeStar

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