BY RAZAK AHMAD

PETALING JAYA: The Cabinet has asked the Urban Wellbeing, Housing and Local Government Ministry to ensure that the interest rate and duration of repayment for housing loans given out by developers do not burden the people.

Minister Tan Sri Noh Omar said the Cabinet has also directed his ministry to look into the effectiveness of the policy of allowing developers to give out loans.

This, he said, was necessary to determine if the policy would really help the people finance their house purchase.

He said the Cabinet wanted the policy’s guidelines to be clear and easily understood by both the lenders and borrowers.

“My ministry has been asked to examine and further improve this policy,” said Noh in a statement, adding that he had briefed the Cabinet about the matter during their meeting yesterday.

He explained that allowing developers to offer loans was an existing policy.

Several companies, he said, had already been granted moneylenders’ licences so that they could offer bridging loans for buyers to cover the deposit payment for their houses.

Last Thursday, Noh suggested that eligible housing developers could apply for moneylenders licences to provide loans of up to 100% to property buyers, with the licences to be issued in accordance with the Moneylenders Act that falls under the ambit of his ministry.

Several developers welcomed the suggestion but consumer groups, property experts and officials questioned whether it was a good idea.

Among them was Second Finance Minister Datuk Johari Abdul Ghani, who explained that the reason why many Malaysians were still without a house was due to their low supply and not because of a lack of financial institutions willing to give loans.

CIMB Group Holdings chairman Datuk Seri Nazir Razak also expressed his concern, saying that allowing housing developers to apply for moneylenders’ licences could compound the risk of a debt crisis in the country.

On Monday, Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi said that Noh had been asked to explain the matter to the Cabinet.

“My ministry is taking proactive measures to conduct a review of the effectiveness of the facility to provide loans under the Moneylenders Act 1951 (Amendment) 2011, so that it is not misused by any irresponsible licence holder,” Noh said.