BSN looks to extend Youth Housing Scheme

KUALA LUMPUR: Bank Simpanan Nasional (BSN) is looking to extend the government’s Youth Housing Scheme (YHS) which offers 100% financing for first time homebuyers, after less than a tenth of the funds allocated have been taken up, more than 16 months into the scheme.
BSN, which is the sole bank appointed for the RM6 billion scheme launched in July 2015, has only approved RM400 million worth of loans thus far, put in by 1,600 applicants. Of this RM200 million have been disbursed.
Most of the loans are for properties in the primary market thus the loans are disbursed according to progressive payments.
BSN deputy chief executive of retail banking Frederick Siew said as of October this year, the bank has received 4,000 submissions with a total value of RM1 billion, of which 1,600 loans with a total value of RM400 million were approved.
“We’re giving out 100% loan … so, we need to be very careful because we have to be a responsible lender. We have to make sure that the buyers are credit worthy. It is risk-based. The risk for us is very much higher compared with a normal housing loan,” he told reporters at the announcement of a collaboration with developer Oriental Interest Bhd (OIB) yesterday.
“When we first launched it that time, there was not much traction, awareness was quite minimal. It’s only when we started collaborating with developers that people got to know about this,” he said. BSN has partnered with 886 developers to promote YHS.
According to BSN senior vice-president/head of distribution Akhsan Zaini, the approval rate for YHS is in line with approval rates for normal housing loans in the industry and this is due to the usual credit rejection reasons including bad credit standing.
“My advice to young married couples, you need to manage your finances from the beginning, then you will be able to own a house. This is a 35-year commitment,” he said.
“Of course, for blacklist (cases) with other financial institutions, we have certain guidelines on that,” he added.
Akhsan said the interest rates for loans under YHS follows risk-based pricing, according to customer credit standing and can go as low as 4.65%. He said BSN will discuss with the government to hopefully extend the scheme beyond the two-year period.
Announced under Budget 2015, YHS is a partnership between the government, BSN, Cagamas Bhd and the Employees Provident Fund. It is targeted at married youths aged between 25 and 40 with a combined household income of no more than RM10,000 who are buying their first home.
The scheme is limited to 20,000 applicants or valid for two years, whichever comes first. Under YHS, BSN provides home loans ranging from RM100,000 to RM500,000 with a tenure of up to 35 years or the age of 65, whichever is earlier.
Both conventional and Islamic home loans are available, with financing margin of up to 100% of the purchase price and successful applicants receive additional financing of up to 5% of the purchase price for the cost of Mortgage Reducing Term Assurance or Mortgage Reducing Term Takaful.
In addition, successful applicants also get monthly disbursements of RM200 from the government for the first two years from the first disbursement.