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KUALA LUMPUR, Sept 20 — A maximum loan interest of 6 per cent is a fair rate for developers to charge house buyers, Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar has said.
“We are still getting feedback to look on what is the acceptable rate. But roughly, based on early feedback, I think developers should impose up to 6 per cent interest only,” he was quoted saying by English language daily The Star.
He said the media and the public have sensationalised his mention of a 12 per cent interest rate with collateral and 18 per cent without collateral, which is the maximum rate allowed by the Moneylenders Act.
Noh stressed that as minister in charge he had the authority to set the rate that will actually be used.
“Under the Act, it is stated that the money lender can charge a maximum of 18 per cent interest rate if without collateral, or 12 per cent with collateral,” he said.
“The media and the public kept highlighting the maximum allowable interest rate, but you must know that as minister, I have the power to set the interest rate as well as the loan repayment period.”
Noh added that the initiative was to help make up the gap that banks cannot lend to home buyers, and not be a 100 per cent loan.
He said that at the end of the day, developers are more concerned about selling off their properties than to seek profit from this interest.
Earlier this month, Noh announced the introduction of the initiative that enables property developers to give out loans to buyers at an interest rate of 12 per cent with collateral and 18 per cent without collateral.
Noh said that the move is intended to assist Malaysians who are unable to get a full housing loan from banks or those who may only be given a partial housing loan.
However the proposal has been met with fierce opposition, including from his very own colleague Second Finance Minister Datuk Johari Abdul Ghani who deemed the proposal illogical and unsustainable.