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Thursday, July 10, 2008

Scheme to help lower-income group cope with housing loans

The Finance Ministry is discussing with banks to reduce the monthly repayments for housing loans to lessen the financial burden of the lower-income group.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said the move would enable borrowers to have more disposable income for their daily expenses.

For example, a person who has managed to repay half the amount of his 20-year loan of RM300,000 within 10 years might be given 20 years instead of 10 to repay the rest of the loan.

The monthly loan repayment would thus be reduced, giving the buyer additional disposable income, he added.

“I have discussed this idea with representatives of the banks, and they have given a positive response to the loan restructuring scheme,” he said.

“The lower repayment will ease the burden of borrowers,” he said during the winding-up speech on behalf of his ministry.

On credit cards, Nor Mohamed said the ministry had asked banks to review the move to abolish the 20-day interest-free period for new retail transactions for credit cardholders.

The move was criticised by the public and MPs who said that the 20-day period allowed consumers to plan their spending.

“A decision on this will be announced later,” Nor Mohamed added.

On the fear of recession, Nor Mohamed said Malaysia had shown strong resilience in countering the effects of inflation, a financial crisis and the recent spike in oil prices.

He said such problems had cropped up in 10-year cycles, adding that the country had suffered the effects of a drastic drop in commodity prices in the 1980s, the financial crisis in 1997 and now the surge in global oil prices.

“We don’t know whether such crisis, which came up every 10 years, should be viewed as a coincidence or whether there were some groups who didn’t want other countries, such as Islamic countries, to become economic successes in their own right.

“But, it’s important to understand that such crisis should not be regarded as the last that we will face and we must be prepared for all eventualities,” he added.

Nor Mohamed said it was also pertinent that the Government practised fiscal discipline.

By The Star

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