Home loan market settles (The Brunei Times)

Published in the June 26, 2013 issue of The Brunei Times. Click here for original article

Home loan market settles

Potential home buyers who had held back on buying immediately after the new rates were imposed are now back in the market. Picture: BT file

 

Debbie Too and

Jennee Grace Rubrico

BANDAR SERI BEGAWAN

Wednesday, June 26, 2013

THREE months after the central bank imposed changes in key interest rates, the residential loan market appears to have adjusted to a new normal.

Potential home buyers who had held back on buying immediately after the new rates were imposed are now back in the market, opting to proceed with long-planned purchases in the wake of the changes. Financial institutions, on their part, have factored the new rates into their products and are now back in business after a number imposed a short-lived moratorium on home financing.

"We are still going to go ahead and take up a home financing product," said Rina, a potential home owner who had earlier expressed concern over the impact of the changes in the interest rates on access to home financing.

She said that she and her husband were going to push through with the plan to get home financing since there was "no choice".

The Autoriti Monetari Brunei Darussalam (AMBD) on March 6 imposed new rates with the aim of enhancing the financial infrastructure and inculcating sound financial and debt management among users of credit.

Under the AMBD directive, residential property loans or financing now have a revised maximum effective interest rate or annualised profit rate of not more than 4.5 per cent per annum.

Following the amendment of interest rates, banks -- some of which froze home loans for around a week -- altered their packages to take into account the new interest rate regime.

Among others, banks decreased the amount they would finance for the property to 70 per cent -80 per cent of its value. Subsidies for home loan packages, which can amount to $15,000, were also cancelled.

Indirect impact

In an email interview, Dr Chua Yang Liang, the head of research for Southeast Asia for property consultant Jones Lang LaSalle, told The Brunei Times that the impact of interest rates on housing demand is "not as direct".

"Fundamentally, housing demand can be a consumption or for investment... In Brunei, as the housing market is still largely a domestic play, the rise or fall of interest rate may not change demand as quickly or as dramatically as you would expect," she said.

She also said that Brunei is a "relatively stable market" and added that while Bruneians might change their buying pattern in reaction to the shift in the interest rate, "we do not think that this alone is sufficient to lead to a structural shift to the residential market".

While overall the home financing market seems to be getting back on track, however, there could be changes in banks' share of the market as debtors flock to creditors with the most favourable packages.

Rasidah Haji Abu Bakar, a reporter for The Brunei Times and a home loan applicant, said that she is now opting to purchase property through Standard Chartered Bank (SCB) because the bank gives a longer repayment period compared to HSBC (B) Sdn Bhd, her previous choice.

"They (HSBC) changed their repayment period for home loans to 10 years and I can't afford to repay for a house in 10 years," she said.

She also said that SCB provided her with subsidies for the processing fees and other contractual agreements with the bank. Even with this, however, she is required to shell out more cash for her loans now since additional items such as the mortgage reducing term assurance -- an insurance cover in the event of the applicant's death or permanent disability -- would require a personal loan to pay off.

Cheok Fui Say, general manager of Retail Lending at SCB, said that demand for home loans has continued, but it was not clear if the increased demand was seen as a direct result of the rates revision.

She only said that "with the revised rates, customers are even more advantaged by the fact that all rates are equal and this would save them time from going from bank to bank to 'shop' for the best rates". She added, though, that the bank has seen a surge in applications for refinancing.

HSBC, on the other hand, said in reply to questions sent by The Brunei Times that volumes have gone down.

"(HSBC is) satisfied with the changes it has made on its home loan application, but obviously the volumes have reduced considerably over the past few months as a result of these changes."

HSBC's restructed home loan packages now have a repayment period that was shortened to 10 years, and the bank has told customers that it would only finance properties for up to a maximum of 70 per cent of their value. The bank has also taken away subsidies that used to amount to a maximum of $15,000 and included land valuation, insurance and others.

Other borrowers, meanwhile, opt to take up financing from banks that they have a history with. Rina, for instance, said that she and her husband would probably opt to go to Bank Islam Brunei Darussalam (BIBD) "because it's my husband's bank".

"We haven't met up with the home financing specialist to discuss what our package would be but we heard that financing would be up to 80 per cent only," she said.

A home financing specialist from BIBD said: "At the bank we would handle the financing option, and we offer financing up to 70 per cent of the market value or the selling price, whichever is lower."

She added that on a case-by-case basis the amount being financed could be increased.

Depending on the financial health of the customer, sometimes the subsidies can be included in the total amount for the home financing product, but if they are not eligible, customers may have to opt for a personal loan to pay for the subsidies. Baiduri Bank, for its part, says it has been doing well on the home financing front.

Pierre Imhof, the chief executive officer of Baiduri, said that the amendments to the interest rates did not have much of an impact to the bank's home financing packages as it had already been offering rates that were in line with the new rules prior to their effectivity.

Imhof added that the price that Baiduri grants under its facility is directly linked, or is in proportion, to the risk the bank has to take.

"What we have also seen is that there is a backlog to the access of ownership in Brunei and we definitely believe that a number of people are still keen to come and see us to find the right loan," he said. The Brunei Times

 

 

Off the beaten path: Taiping (BusinessWorld)

Published in the June 6 issue of BusinessWorld. Click here for the original story. 

Focus

Posted on 06:37 PM, June 06, 2013

By Jennee Grace U. Rubrico

Off the beaten path: Taiping

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The decrepit shop houses that line the sidewalk of the main road hardly encourage tourists to check out what the town has to offer. Many look abandoned and stand as remnants of an era passed, when trade must have bustled and the tin industry that helped fuel an industrial revolution in the west was at its peak.

Taiping Lake -- www.wikipedia.org

Without a mall, theater, beach or port, and without a lot of buzz going around, the town of Taiping in the state of Perak, Malaysia, is easy to ignore. About the only thing it is known for is its zoo, which draws 700,000 visitors a year, mostly students who go on excursions to see the animals.

But there is more to the town than meets the eye. Unquestionably off the beaten path, Taiping rewards the adventurous traveler with experiences that are infinitely more profound than mere merry-making and leisurely sightseeing.

“We are a small town [but] we have a beautiful background of heritage. We still have our old buildings, and we have our nature,” says Hanim Ramly, the head of Taiping’s Tourism, Education and Publicity Division.

Developed by the British to be the administrative center in Perak in the 1880s, Taiping does not hide its age. A walk around the city reveals architectural treasures and heritage buildings at every turn. The District Offices building in the heart of the town was built in 1897 and continues to stand in full colonial splendor.

Other restored structures that transport visitors back to the era of the Empire’s occupation include old schools and churches set up by the British during their stay in the town, centuries-old houses and the first garrison to be built in peninsular Malaysia, the Taiping Prison, which was built in 1879. Other telltale signs -- like a red phone booth reminiscent of the ones seen in old movies -- also serve as serendipitous finds for those who take the heritage stroll.

Two museums in the town are perhaps more remarkable for their age and history than for the collections they house. The Perak Museum, also in the heart of the town, is the first museum to open in peninsular Malaysia and is a study in colonial architecture with its whitewashed walls, intricate towers and decorated windows. Built in 1883, the structure houses a collection of 8,474 items, of which 5,074 are cultural, 523 are nature-related and 2,877 are archeological. Adding to its vintage feel are a World War II aircraft and an old steam train that are parked on the grounds.

A side trip to the district of Matang, meanwhile, brings one to the second museum: the Matang Historical Complex, also called the Ngah Ibrahim Fort. Built as a residence of tin miner Ngah Ibrahim in 1858, the house is made in the style of old Malay buildings, with wooden floors and heavy wooden staircases running from both sides of the main door. At the threshold, visitors are met by an elephant in the room -- a statue of it that depicts how Ngah Ibrahim’s father Long Jaafar made his fortune from tin mining. According to legend, the elephant, owned by Long Jaafar, went missing and when found days later, was discovered covered in mud that had tin ore embedded in it.

Over the years, the residence changed hands. It fell under the British, who used it as a court to try a Malay chief for the death of a British officer; and the Japanese, who turned it into a strategic operations center during World War II. It is now under the Perak government, which has turned it into a showcase of its own history as well as that of the man who originally owned it.

Also in Matang is the Matang Mangrove Forest. Boardwalks beside the river lead visitors from the administrative office to the deeper parts of the forest, and visitors are guaranteed to see some wildlife. Our party, led by Taiping residents Dina and Hidir, had barely gotten to the starting point when a seasnake poked a diamond-shaped head out of the water and started eyeing us. Less than five minutes later, while we were still on the platform, Hidir pointed out another snake, about three feet long, sleeping with its body wrapped around a tree root.

During the 15-minute walk which saw us going half the distance of the trail, our party saw crabs in the mud below the boards, a woodpecker pecking on a tree, different tree species, and fish. We could also hear monkeys calling, but before we could get to them we decided that it would be safer for us to head back.

Dina assured us that the trail was safe. We did meet several forest rangers roaming in pairs during the short trip we took around the mangroves, and a lot of log houses, which are rented out, are built on the river.

The natural endowments of Taiping are also visible in the town proper, where centuries-old trees that line its main roads droop towards the ponds and lakes of the Taiping Lake Gardens, a former mining ground that was converted by the British into a public garden. Close by, at 1,000 meters above sea level, Maxwell Hill hosts nature trails and boasts not only cool weather and flora but also the best view of the town below it.

Ms. Hanim, Taiping’s tourism head, acknowledges that while the town has a lot to offer, more needs to be done to get it to figure more prominently on the tourism map.

She notes that when tourists visit the town, they usually stay for only two or three hours. She also notes the lack of foreign tourists, saying that of the 700,000 visitors the town gets annually, only 0.8% come from overseas.

But promotions are under way, she said, and the town is working with the governments of neighboring cities to get more tourists.

There may yet come a time when more tourists would walk down Taiping’s paths, and the town would gain the recognition it deserves.

For the time being, though, the feeble shop houses that line its streets continue to guard its secrets, and only those who dare to see what lies beyond would discover the riches that this quiet, aged town hides.