35-year loan tenure more than enough, says Rehda president

KUALA LUMPUR (Sept 21): In response to requests for an extension in the tenure of housing loans to up to 40 years, the Real Estate and Housing Developers Association (Rehda) said the current 35-year limit is more than enough.

"I think 35 years is more than sufficient — it's palatable. If we were to stretch it, it might be a strain on the borrower," said Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor.

However, he said if certain mechanisms were allowed — for example the allowance of parents as guarantors of a purchaser — an extended loan tenure could work.

"In other countries, there are mechanisms that allow the parents to assist — which means two guarantors and two borrowers, instead of one.

"The parents are usually in for five to 10 years. There are certain mechanisms that we should give a look. It's already being done in Australia," he said.

Fateh Iskandar, who is also the group managing director and chief executive officer of Glomac Bhd, told reporters this at a press conference, following the group's annual general meeting today.

Rehda's view on the suggested extension of tenure for housing loans echoed Bank Negara Malaysia's view on the issue, as the central bank said in a statement yesterday that 35 years is more than enough.

It cited as example, a 35-year housing loan that is offered to a 25-year old borrower would extend up to the retirement age of 60 years old.

Increasing the loan tenure to 40 years will only serve to add to the total cost of financing, without significant improvements in the affordability of one's monthly instalments, BNM said yesterday. — theedgemarkets.com

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