Housing finance inaccessibility for low-income earners in Malaysia: Factors and solutions
Globally, several studies have shown that low-income house-buyers faced severe problems in gaining access to house-loan. Therefore, this study investigated the root causes of housing-loans inaccessibility for low-income earners (LIEs) in Malaysia and proffer pragmatic panaceas in an unexplored dimension. This was done sequentially, first, the qualitatively explored and findings from the qualitative phase further tested and analysed via a questionnaire survey. The “quantilised findings” were validated by the Malaysian LCH policymakers. Findings show that the pervasiveness of house-loan rejection for LIEs is about 70%. The study found bad status of Central Credit Reference Information System, insufficient income, lack of creditworthiness, high default rate, fear of inability to recover loan and operating costs from the auction, repayment incapability, lack of evidence of regular income, the absence of collateral, inability to make down payment among others as the root causes of the factors that contribute to the house-loan rejection. The paper concludes that the government should establish a special housing loan scheme for LIEs while rent-to-own scheme should be sustained and strengthened via an independent agency. Also the self-employed should be encouraged to enrol with the Employee Provident Fund and a minimum wage increase to RM1,500/month among others was recommended.