JUNE 6 — It was very heartening indeed to note the news report in the Malay Mail Online (dated June 6, 2018) that the new government is now looking into making bank loan approval easier for first time house buyers especially that in the critical affordable housing segment.
This has been long overdue and undeniably one of the main causes for the spike in unsold affordable properties around the country both in the primary market (i.e. new properties sold by developers) and the secondary market (i.e. sub sale or second hand properties sold by existing owners).
For the past few years it has been common knowledge that commercial banks had tightened their internal housing loan evaluation process and lending criteria resulting in a sizeable “actual” loan rejection rate.
The market perception was that banks were citing all kinds of flimsy excuses to reject loan applications especially in that “unattractive” low and medium cost property segments.
However for some inexplicable reasons this was even downplayed by the authorities including Bank Negara Malaysia and the financial institutions themselves (through the Association of Banks Malaysia) who appeared to rely too much on official statistics rather than look at the actual situation and feedback from the ground.
It is hoped that the new government will rein in the commercial banks and compel them to play a more holistic role in the re-building of our nation after years of totally neglecting the long-suffering B40 segment (and to some extent the M40 segment as well).
Traditionally most banks also charge a higher interest rate for housing loan below RM100k thus burdening the B40 group even more.
While ironically for financing of luxury properties above RM500k, banks will generally charge a much lower interest pricing as a promotional bait to attract the wealthier house buyers.
In other words, indirectly, what the banks are doing is that they are using the higher profit spread from the B40 segment to “subsidise” the attractive lower pricing for the rich and super-rich segments!!
Now if this isn’t cruel and inhumane, what is?
Surely the government must redress this anomaly and instruct the banks to put a stop to this.
Indeed for first time house buyers, buying affordable properties (both in the primary and secondary markets) it will only be fair if the banks are required to charge a lower, fixed rate pricing. This is so that any significant fluctuation in the BLR will not burden the borrowers as the banks will normally increase the instalment amount when that happens.
Another questionable area in the banks’ loan evaluation process is the manner in which they compute the applicant’s income. In the past few years it is believed that most banks wantonly exclude income derived from part time jobs or businesses even though it is common knowledge that large numbers of our working population actually rely on side income.
The mushrooming of nasi lemak and other food stalls and of course the popularity of e-commerce businesses and ride-hailing services such as GRAB offers a clear evidence to this reality. Therefore banks really need to shake off their old mindset and embrace this new reality.
Our country is now undergoing a massive revamping and rebooting, in a determined effort to get rid of unfair practices and regressive laws in order to create a fair, just and equitable nation which benefits every level of society without neglecting anyone.
So likewise the banks should also review their roles within the context of the New Malaysia.
It is high time they climbed down from their lofty position to revisit their original role as bankers and humbly “get down to the basics” in the area of nation-building.
Practically all the banks have been reporting annual profit in billions of ringgit these past few years. Shouldn’t they now contribute a small part of that huge profit back to the rakyat especially to lighten the burden of those in the lower and middle income groups?
*This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.
