80 percent of CHDB loan for construction
Date：2017/05/19
Myat Nyein Aye | Wednesday, 17 May 2017
[Myanmar Times] State-owned Construction and Housing Development Bank (CHDB) is now offering loans to developers and to people who will invest in the government’s low-cost apartments. However, 80 percent of the bank loans will be only available to developers for construction purposes, said Daw Myint Myint Mu, CHDB director.
“The maximum loan CHDB is providing for construction is 80 percent and 20pc is for buying apartments.
“There is about K80 billion the CHDB gave for the construction of Ayeyarwun and Yadanar Hninsi housing [projects] by the government,” she added.
The loan percentage for buying an apartment is lower than that for construction purposes, because apartment demand and production rate are slow at the moment.
The demand for savings accounts in the bank is also lacklustre. That is why if there are more savings accounts in banks in the future, the loan percentage for purchasing apartments will increase, the director explained.
“There are currently 15,000 housing saving accounts and 300 savers have started to get loans from the bank. There is a rule which says savers need to have K3 million in accounts for the 30pc down payment,” said Daw Myint Myint Mu.
When people want to buy government-based low-cost apartments, they can get loan from the CHDB and they can pay the bank back though long-term instalments within eight years. But first, buyers need to pay 30pc of an apartment’s total price as down payment.
Those who have savings accounts in the CHDB have a better chance to get prioritised for purchasing an apartment, but the problem is that most savings accounts don’t even have enough funds to cover a 30pc down payment.
“We have about 15,000 saving accounts but only 300 accounts have enough [funds to cover a] down payment.
“There are currently K15 billion for savings in our bank but we can only provide loan to 300 people for buying apartments, due to the down payment criteria” she said.
She added that the government has a plan to implement 8000 units within two years so that people who have savings accounts with the CHDB, and if they have enough money for a down payment, would be given priority to purchase units.
The bank has a plan to give loans to both government apartments and apartments built by private contractors once the new Apartment Law is enacted.
Since there isn’t any new legislation, there are difficulties in giving loans to people who want to buy apartments from private developers, according to Daw Myint Myint Mu. In short, new legislation on liberalising and regulating the real estate market is essential.
Moreover, there is likelihood that the CHDB has a chance to borrow international loans with low interest from an agreement. The Myanmar and Japanese government are in talks.
If the bank gets an international loan, they will be able to give back the loans through a long-term payment.