Sarawak Rejects Developer-Sourced Home Loans Move, To Provide Own Lending Scheme


KUCHING: The Sarawak government will not adopt the move to allow housing developers to provide loans to buyers, and willcome up with its own financing scheme instead, says Datuk Amar Abang Johari (pic).

The state Deputy Chief Minister said the idea proposed by the Urban Well-being, Housing and Local Government Ministry would not only be financially risky for developers, but would also distract them from carrying out their core business and increase the cost of end financing.

"This is because developers could be exposed to borrowers' default risk over the long term, especially if the home buyer's creditworthiness is an issue.

"Since Malaysia's household debt-to-GDP ratio is relatively high, it could worsen if housing developers are allowed to offer loans to home buyers who have difficulty obtaining loans from banks," he told a press conference here Thursday.

Abang Johari, who is also Housing Minister, said it would be more prudent for prospective house buyers to secure loans from established banks and financial institutions to ensure responsible lending.

As such, he said the state government had set up Mutiara Mortgage and Credit Sdn Bhd as a fully-owned subsidiary of the Housing Development Corporation (HDC) to provide loans for the low-income group.

"For the time being, it focuses on loans for public housing projects under the Program Perumahan Rakyat and HDC's own affordable housing projects.

"This lending agency will be a better alternative for prospective house buyers who have difficulty securing loans from banks," he said.

He added that Mutiara Mortgage would follow bank loan management standards in processing loan applications while giving some flexibility to deserving applicants. - TheStar

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