SHAH ALAM, 12 July: Bank Negara should Bank Negara should reinstate Developer Interest-Bearing Scheme(DIBS) for first time buyers for all properties below RM 400,000 to compensate for any negative inflationary impact and higher loan repayments from the increase in interest rate by 0.25% from 3% to 3.25%.
The Member of Parliament for Bagan, Lim Guan Eng, said that the increase in interest rates would have inflationary impact, raise the cost of living as well as dampen consumption spending as more money would be required to service their loans.
He said that this would not only give less money to spend for existing borrowers of all loans, increase the financing cost for businesses leading to higher prices and also make it more difficult for first-time buyers to get loan approvals.
“One of the main complaints of developers and first-time buyers is the difficulty of getting loan approvals due to the stringent repayment ability requirements imposed by Bank Negara,” Lim said in a press statement.
He said that any hike in interest rate that would burden borrowers without any compensating measure to help them to repay or service their loans.
“Reinstating the DIBS for houses below RM400,000 would benefit first-time buyers and promote housing democracy,” he said.
DIBS is a form of Interest Capitalization Scheme (ICS) where interest costs are capitalized or built into the sale price, instead of being paid by the borrower as they are incurred.
During the construction period, the developer (instead of buyer) pays for any interest incurred on the housing loan until construction is completed. To offer DIBS, developers include the cost of interest payments into their selling prices.
This allows buyers to purchase their houses by paying 10% and giving them breathing room by not paying interest payments and rent at the same time whilst waiting for their houses to be completed.
“Unfortunately the Finance Ministry and Bank Negara has rejected the proposal to reinstate DIBS,” he said.
NS
