Offering those ill-equipped to buy houses 100% financing is not the solution

Prime Minister Datuk Seri Najib Tun Razak’s announcement that he plans to launch “My First Housing Scheme (SRP)” to enable young adults earning under RM3,000 to buy a house is well-intentioned but ill-advised.

Malaysia is indeed facing a housing crisis. The property development sector is booming. Unfortunately, property prices are so high, suitable homes are out of reach of most Malaysians. And yes, those most affected are young people looking to invest in their first home.

However, offering young adults the opportunity to “buy” a house without downpayment is not the solution.

According to Najib, under the SRP, the government will bear the cost of the initial 10% deposit required via Cagamas Berhad, the national mortgage corporation. Would this sum be in the form of a loan or a grant to the buyer? If it is the former, the buyer would still be obliged to pay back this sum at a later date over and above the monthly instalments. If it is the latter, where would the seed money for this scheme come from if not the National Treasury? Should taxpayer contributions be used to help graduates buy houses?

Buying a house without any downpayment also means that the buyer has zero equity. In the event of an economic slump, or if the anticipated property bubble bursts, he could end up with a mortgage that far exceeds the value of the house.

Getting 100% financing does not mean that the buyer has no costs to bear. He will have to pay the usual legal and transfer fees, which could be quite onerous for a low-income earner. He will certainly be required to buy mortgage insurance to protect the bank should he find himself unable to service his loan, the cost of which could be added on to the loan amount.

Finally, we have to ask ourselves, how much can a person whose monthly income is under RM3,000 afford to repay each month? Will the SRP create a generation of Malaysians burdened for life by debt they cannot afford to pay off?

Perhaps Najib, Cagamas and the participating banks could work together to formulate a home ownership savings scheme to help people save so that they will have enough a downpayment when they are in the financial position to service a home loan.

Please keep on looking for a solution. Hardworking young Malaysians, graduates and non-graduates, deserve the privilege of owning a house – but not at the expense of their future.


Hajjah Haslinah, a 49-year-old Qualified Valuer, is one of the candidates proposed by the Malaysian Civil Liberties Movement for the next general election. She has been running an established map-making company with her life partner for the last 20 years. She is also the Immediate Past President of All Women’s Action Society (AWAM), a non-partisan independent feminist organisation committed to improving the lives of women in Malaysia. She has been involved in grassroots and advocacy work on women’s rights, empowerment, among others, for the last 10 years.