July 16, 2020 @ 12:42pm
GEORGE TOWN: The Consumers' Association of Penang (CAP) has warned consumers against taking lightly the moratorium on loan repayment offered by banks amid the Covid-19 pandemic.
According to Bank Negara Malaysia, any appeal for extension after the current six-month moratorium ends will be closely scrutinised based on the restructuring of loans, on a case-by-case basis.
CAP president Mohideen Abdul Kader urged consumers who really need to restructure their repayments to approach their respective banks soonest possible, to renegotiate their loans before the moratorium deadline on Sept 30.
"Consumers must not wait until the last minute to appeal. The reason is, immediately after the deadline, any non-payment of loan will be considered as a default in payment and it starts to accrue interest which can be exceedingly painful.
"Also, consumers who have a number of loans with more than one bank, or have had pay cuts and are facing difficulties in servicing the loans, can consult the Credit Counselling and Debt Management Agency (AKPK). The agency can counsel, or if required, restructure, multiple loans of a borrower to safeguard the person's financial well-being," he said today.
Meanwhile, Mohideen said CAP welcomes Bank Negara's lowering of interest rates by 0.25 percentage points, from 2 per cent to an annual rate of 1.75 per cent.
He said the interest rate reduction for housing loans should benefit those in the Bottom 40 (B40) and Middle 40 (M40) groups.
He added that those in the B40 and M40 groups need more help because the government recently raised the B40 family income line to a maximum of RM4,849 from RM4,360.
The government also divided the M40 group into four categories, from M1 to M4. The M2 category of the M40 group earns between RM5,880 and RM7,099.
"The reduction of interest rates will help lessen the financial burden of consumers who are paying off their housing loans," he noted.
Mohideen, however, said CAP does not agree that the interest rate reduction should be used as a means to push for house purchases.
He said though the encouragement of consumers to take lower interest rates to acquire homes would help developers, the move would expose financial institutions and consumers to greater risks in uncertain times like this.
He added that rather than selling housing units, developers should seriously consider renting out unsold units or taking the rent-to-own approach to significantly reduce overhang.
That way, Mohideen said, it would be much safer for all parties concerned – the developer, the bank, and the tenant.
"Developers are able to reduce the overhang of properties by renting them out, consumers are not committed to a hefty loan while their current employment is full of uncertainties, and the banks do not have to take on increased risks giving out housing loans," he added.
Mohideen also urged the government to introduce a Residential Tenancy Act to provide legal protection for both landlords and tenants.
He said in many cases, landlords encounter problems with tenants who do not pay rent for months, yet refuse to move out, or those who damage property.
"To the tenants, they do not want rental to be increased ad hoc or having their lease terminated abruptly. As such, we recommend the establishment of a tribunal to handle tenancy disputes in every state after the introduction of the Residential Tenancy Act.
"This approach gives confidence to people to rent out their premises, while potential tenants know that it will not be so easy for house owners to terminate their lease any time unless the tenants violate their tenancy agreement," he said.