New loan cap makes it tough for first timers.

FRESH graduates and young professionals will find it more difficult to buy their first homes with their current salaries as banks reduce the housing loan period. Malaysia Employers Federation (MEF) executive director Shamsuddin Bardan says that based on last year’s MEF salary survey for executives, the average starting pay for fresh graduate was between RM1, 520 and RM3, 067 depending on whether you start working with a diploma or masters degree. A basic degree holder starts with a monthly income of RM2, 121 while a graduate with an Honors degree holder will receive RM2, 513. Last few week, Bank Negara set a new ceiling on housing loan tenure, reducing it from 45years to 35years. National Housebuyers Association honorary secretary-general Chang Kim Loong says that although a 35-year loan is “more than adequate” for house buyers to buy their “dream home”, it is “almost impossible” for fresh graduates to buy a property without support from their parents. “Many condominiums launched are over RM500,000 even in suburban areas and landed properties in areas such as Kota Damansara are almost RM800,000 and above. “How is a fresh graduate with a starting salary of RM3, 000 ever going to afford such properties?”He asks. Property consultant and author Milan Doshi, however, says the new Bank Negara caps are “pretty minor” since first-time home buyers are able to borrow up to 90% of the purchase price for their first and second property. Thus, the requirement of needing a higher down payment under the new rules does not arise. Banks are still giving loans till age 70 years. “He says. “For a 30-year-old buying his first property, his loan tenure would have reduced from 40 years to 35 years. “The difference in the monthly installment for a RM500, 000 loans would just be RM125 per month additional payment, something which is still affordable.” He said the changes would however affect those earning “hand-to-mouth” incomes

The Star

For more information Latest caps expected to mainly affect younger generation