PETALING JAYA: The Cabinet wants the Urban Wellbeing, Housing and Local Government Ministry to review and improve the current policy which allows housing developers to provide loans to home buyers. Its minister, Tan Sri Noh Omar, said several companies have been given moneylending licences to provide loans to help buyers with their deposit payments. He said the Cabinet asked the ministry to review the policy in terms of its effectiveness in helping the public purchase houses, interest rates and repayment period; as well as proper guidelines for both developers and borrowers. "The financing will be done as provided for under the Moneylenders Act 1951 (Amendment 2011), which is under the purview of my ministry. At the same time, the ministry will also take steps to ensure the provisions under the Act are not misused by irresponsible moneylenders," he said in a statement. Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi had instructed Noh to brief the government on the initiative after Noh last Thursday announced the initiative to let eligible developers provide housing loans of up to 100% to property buyers, following difficulties faced by buyers in securing bank loans. The proposal, however, was received with strong opposition by many, including Second Finance Minister Datuk Johari Abdul Ghani who had reportedly said the idea was illogical and unsustainable. Responding to the criticism, Noh said the idea was not new, and selected developers were already licensed to offer the loans. Under the initiative, developers will have to apply for moneylending licences issued by the ministry under the Moneylenders Act 1951 (Amendment) 2011, which would allow them to offer loans at an interest rate of 12% with collateral and 18% without collateral. Meanwhile, the Real Estate and Housing Developers Association Malaysia (Rehda) said the association is proposing that property developers with money lending licences only offer "bridger" loans, which are capped at interest rates below 10%. Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor said such loans will only be offered to home buyers who have secured loans from banks but were unable to obtain the desired margin of financing. "Demand is still strong but buyers are not getting the desired end financing. Based on feedback from buyers, most banks are giving 75% to 80% today," he told reporters at a briefing on Rehda's Property Industry Survey 1H 2016 today. Rehda said the interest on these "bridger" loans will not be in the teens and proposed to cap the interest rate at 2% above cost of funding. "We have cost of funds, so we are looking at anything that is reasonable, 2% above our cost. We have cost and risk. This is something we are still talking about and waiting for feedback," said Fateh Iskandar. "We are looking at something reasonable, not in the teens. The minister was saying what's in the Act but we need to look at supply and demand. If you charge too high, people will not come to you," he said, adding that the scheme must be realistic and sustainable. Rehda also proposed to limit the loans to first time house buyers who are purchasing homes priced RM500,000 and below. It also suggested to offer the loans to first time upgraders. Fateh Iskandar said the scheme definitely has risks and only developers with healthy balance sheets would participate. He said some Rehda members already have the money lending licence and the association is in the midst of gathering information from its members.