EVERY prospective 1Malaysia People’s Housing (PR1MA) housebuyer is guaranteed a home upon winning the ballot, so announced PR1MA Corp Malaysia. PR1MA’s target group is the first-time buyers with a monthly household income of between RM2,500 and RM10,000. Entry-point qualifications are low: zero deposit, no legal and other fees and, the assurance of a 110 per cent housing loan to those who qualify. To make it even more attractive, Malaysians eager to own their homes but are unable to raise a bank loan, can resort to the rent-to-own (RTO) scheme offered. Obviously, what the government intends to establish is a housing democracy and encourage Malaysians to accumulate land-based assets. Definitely a noble objective when the individual is endowed with a good sense of money management where prudence informs financial decisions. Or, barring that the individual is properly tutored on how to manage this lifelong commitment.
Granted, these PR1MA homes are labelled as affordable and until last month, almost a hundred thousand units have been approved in 32 locations nationwide, but that the ceiling price can touch half a million ringgit for funding purposes suggests a hefty monthly loan repayment even where the borrowing period is extended to 35 years. For the optimist, the assumption is hard work will pay off and promotions mean more money over the years. Few will sit to consider a bleak future. Few, too, will worry about making ends meet after a hefty housing and car loan because these two items — the heaviest commitments for the average household — are always viewed as needs. Furthermore, a house is viewed as an investment with its value expected to appreciate over the years. Therefore, to the average mind, the struggle to keep up with the monthly payments is a laudable endeavour.
It is then no wonder that Malaysia’s household debt is one of the highest in the region. Last year, for example, saw household debts holding at just over 80 per cent of gross domestic product, putting the economy on a slippery slope. However, the Bank Negara governor said in respect to home loans, Malaysians remain creditworthy with non-performing loans at just two per cent. For this to be sustainable, however, the economy needs to stay robust. If the United States’ subprime problem is anything to go by, home loans given willy-nilly can cause massive economic problems. Granted that the US picture is more complex than merely lending money to credit-risk categories, but the fact remains that a borrower sitting on the edge of financial tolerance is like a camel — all it takes is one additional hair to break its back, an unexpectedly high medical bill, for instance. But, a responsible government is duty-bound to protect the welfare of the people. So, even those who cannot raise a bank loan must be given a chance to own a house. The RTO scheme is then ingenious, as long as the rental charged is sensible.