High Rates on Loans for Affordable Homes Are ‘Shutting Poorer Families Out of the Market’

The interest rates charged by banks on loans used to help low-income families purchase affordable hous­ing units are too high, the Chairman of the Myan­mar Real Estate Services Association has said.

U Khin Maung Thant said that while it was a“great thing” that banks were providing loans to help people buy afford­able apartments, the rates were well above regional averages.

“Their interest rate, 13 percent, is quite a lot higher than rate in the rest of ASEAN, which is 5 to 6 percent,” he said.

The high rate means that an apartment with a face value of K10 million ends up costing between K15 million and K17 mil­lion, he said, making ac­cess to the market much more difficult for poorer families.

Only buyers with a monthly income of more than K500,000 would be able to afford the monthly repayments, he added.

Myanmar’s real estate industry has been boosted by the availability of in­stalment plans and bank loans, said Ma Hnin Phyu Win, Marketing Manager of a local real estate ser­vice provider.

The Minister for Con­struction has pledged to provide 8,000 low cost apartments under K10 million and the ministry is building low cost and affordable housing pro­jects on the outskirts of Yangon.

The Myanmar Con­struction Entrepreneurs Association submitted price specifications for low cost and affordable apartments to the Min­istry of Planning and Fi­nance.

They stipulated that a 300 square foot apart­ment should cost K7 mil­lion for, while more than K10 million should be charged for a 500 square foot apartment.

Source: Mmbiztoday