As the time period for repayment of homes in Malaysia, acquired under the 5/95 home loan scheme, approaches, everyone is watching if buyers can repay their loans amid forecasts that the economy will slow down in 2011.
According to a banking industry source, 20 percent to 30 percent had begun repayment and majority of the repayment would come on-stream in 2011. However, most of these buyers had usually been able to service multiple loans and came from the high-end segment, he said.
The scheme, which is currently for first and second homes, was designed for selected locations and undertaken by a few leading developers, he said. It was extended in 2008 and was expected to be stopped by the end of the month, as the contract between developers and banks would be over and the real estate market recovered, he added.
The 5/95 home loan scheme allows homebuyers to make only a 5-percent down payment and sign the sale and purchase agreement.
Selected banks secured the loans and the service of the loan will start only when the property is ready to be handed over to the buyer.
Datuk Michael Yam, president of Malaysia’s Real Estate and Housing Developers Association (Rehda), said the special loan scheme was adopted by established and selected developers only.
As it was mainly introduced to wealthy homebuyers, Rehda does not expect any repayment problems from these buyers now or in the future, said Mr. Yam in an interview with the StarBiz.
Sales made from this scheme is also expected to represent only around 5 percent of the total sales made by these developers from several property projects last year, he said.