|Is relaxing bank loan approvals a good move?
For the past few years, property developers have been lamenting that sales are not improving and financial institutions have been strict with bank loan approvals. Several proposals have been raised to ease bank loan approvals especially for aspiring first time homebuyers, to enable more homeownership in Malaysia. While the intention is noble where the ideal situation is for everyone to have a roof over their heads, is relaxing bank loans really the “right” solution in achieving higher home ownership?
Put it this way. If someone approaches you to ask for a loan, and you clearly know that this friend of yours have got some pretty nasty spending habits. From paying his instalments late every month to spending money he does not have on luxurious items. Will you still be keen to lend that money to your friend? Now that YOU are borrowing that money to your friend, the value of money amplifies because YOU feel the pinch if that money does not get returned to you. Similarly, in a financial institution, meticulous checks are conducted via the Central Credit Reference Information System (CCRIS) and CTOS system to view your credit repayment history and the amount of debt you possess. From that credit card debt which you can hardly pay off to that fancy car you are taking a loan from the bank for, everything is trackable. Even that summon or PTPTN loan which you try to forget and magically hope disappears isn’t going to “disappear” any time soon. If you are not taking responsibility for the money which does not belong to you and continuously asking for more and more credit, what makes you think that a 35-year housing loan will give birth to a responsible, timely debtor?
Private developers are also reiterating the point that their sole fight in this battle is for relaxation of loans for first time homebuyers ONLY and under the price tag of RM500,000. While we try to understand where the developer is coming from, if the first time homebuyer applicant already has a massive mountain of debt – does this mean that he deserves the bank loan more than a second or third time homebuyer who has a clean record of repayment history and steady income stream? Yes, while we all agree that the notion of enabling home ownership is a national agenda, the proper way of implementing it should be considered thoroughly.
Of course, it is also unfair to assume that all homebuyers that have been rejected on their home loan application are big spenders who are not responsible on their spending habits. They may be diligently saving up and adopt the prudent approach of financial allocation. Every single cent is properly calculated before any purchase is made. Why then are they still not eligible to apply for a bank loan they that they want?
Is this an issue of not having enough salary to buy a home? It is because they have to play catch-up between salaries and house prices? Is the escalating property prices the root of the problem or is it our low purchasing power? But then again, in order for higher salaries remuneration, there needs to be a complementary efficiency and productivity at work then comes with it. Every citizen, regardless of their nationality or where they are geographically should have access to housing. Perhaps we should consider ideas like short term rentals or rent-to-own schemes to enable accessibility to having a roof over our heads. It is also time for us to start relooking at the notion of having accessibility to housing instead of home ownership.