Remedies to inaccessibility of low-cost housing loan in Malaysia: using the qualitative approach

ABSTRACT Studies have shown that low-income earners (LIEs) faced encumbrances in gaining access to housing finance. Therefore, this study investigated the root-cause of inaccessibility of housing-loan and proffer pragmatic policy solutions so that Malaysian LIEs can access housing-loan to purchase homes via qualitative insight. To achieve this, 40 face-to-face oral interviews were conducted and validated via secondary sources. Findings show that ineligibility and inability to make down payment are the major reasons banks are reluctant to lend housing loan to LIEs. The root causes of the issues are bad status of Central Credit Reference Information System, lack of evidence of regular income, absence of collateral, inability to make down-payment, fear of inability to recover the loan and operating costs from the auction among others. Also, the rejection rate of LIEs housing loan application is about 70% with supporting evidence. A setting-up of a special housing loan scheme for LIEs across the country; government buy-up low-cost houses in the auction and placed them on rent-to-own scheme via independent agency while existing scheme sustained, intensified and strengthened among others were recommended as part of this paper’s contribution and implication with a view to ensuring LIEs gain access to homeownership via housing finance.