Raja Nong Chik said none of the prospective buyers “have any problems with the interest rate”. — Picture by Choo Choy MayKUALA LUMPUR, March 15 — A minister has expressed confidence that prospective buyers could afford the 6.5 per cent interest under the controversial plan to use RM1.5 billion from the Employees Provident Fund (EPF) for housing loans to unqualified purchasers in the capital.
Datuk Raja Nong Chik Raja Zainal Abidin had dismissed yesterday calls to reduce the interest rate for the scheme as it would result in minimal savings.
The federal territories minister said none of the 4,700 potential buyers who have accepted offers to buy low-cost houses but were unable to obtain bank loans “have any problems with the interest rate.”
“I believe all of them can afford it as the government is already subsidising the cost,” he told a media briefing here today.
He explained that the market price for the houses are double the amount being charged and buyers are exempted from stamp duties while also being given a rebate of up to RM2,500 for insurance and renovations.
Raja Nong Chik had told Parliament under the current rate of 6.5 per cent, a loan of RM36,100 over 25 years would incur a monthly repayment of RM243, or 50 per cent more than would be applicable with a 2.5 per cent interest rate.
“If we reduce it to 2.5 per cent, it will be RM161. It is only RM82 difference. This is just political posturing by the opposition,” the senator had said.
He added today the RM36,100 figure was for the newest and most expensive low-cost homes; the rest would be sold for less.
Raja Nong Chik triggered public outcry in January when he disclosed the proposed loan scheme will allow some 20,000 unqualified City Hall tenants to buy homes with up to RM1.5 billion from the EPF, which is tasked with safeguarding the retirement savings of over 5.7 million active contributors.
The Malaysian Insider reported last week that the plan to lend an initial RM300 million from the EPF to unqualified house buyers in the capital has hit a deadlock over security conditions demanded by the country’s largest pension fund.
The EPF had said on February 8 that it is in talks with the federal government but a deal has not been inked for the initial sum of RM300 million to be lent to a special purpose vehicle linked to the Federal Territories Foundation (FTF).
The foundation is directly controlled by Raja Nong Chik.
The minister, however, said in Parliament yesterday that the EPF has already signed “a policy agreement to loan RM1.5 billion” for the housing scheme.
He previously said the loan would be secure as it is guaranteed by City Hall, a government agency, and that the EPF would get a 5.5 per cent return on investment annually from repayments by the new home owners.
The Umno senator also said he expects “not more than 10 per cent (of the borrowers) will default”.
He explained today 24,000 renters have been given offers to buy their homes but only 12,000 have accepted with 5,000 having found their own financing.