LPPSA EXTENDS "SKIM MUDA" TO HELP CIVIL SERVANTS OWN FIRST HOME EARLIER

PUTRAJAYA,  Nov 15 (Bernama) -- The Public Sector Home Financing Board (LPPSA) will extend its “Skim Muda” after the one-year pilot programme received a far stronger response than anticipated, reinforcing efforts to help young civil servants own their first homes earlier.

LPPSA Chief Executive Officer Mohd Farid Nawawi said the scheme, aimed at civil servants aged 30 and below, has continued to receive steady and encouraging applications since it was launched in April 2025.

Alhamdulillah, we have only implemented this scheme for a year. Initially, it was introduced on a one-year trial. But when we saw the very positive response, we extended it for another year. If this momentum continues, we will consider expanding it further,” he told Bernama in an exclusive interview.

bootstrap slideshow

As of October, the scheme had recorded 2,596 applications worth RM208 million. Of these, 304 applications valued at RM95 million were approved within the first six months.

Mohd Farid said Skim Muda offers a financing period of up to 40 years, compared to the previous limit of 35 years. The extended tenure provides two key advantages, namely higher loan eligibility and lower monthly instalments.

“If you start borrowing at age 30, you will have more housing options and lighter monthly payments. We want young people to buy homes early—start with what you can afford, and upgrade later when circumstances allow,” he said.

According to him, the average LPPSA loan now stands at RM341,000, up from RM295,000 in 2020, aligned with rising house prices and borrowers’ changing financial capacity.

On financing eligibility, Mohd Farid explained that confirmed civil servants may apply for financing up to 80 per cent of their net salary, though approvals depend on actual affordability.

“If your net salary only qualifies you for RM350,000, that is the amount we approve, even if the house costs RM500,000. This is important to prevent long-term financial strain,” he said.

He also confirmed that LPPSA will increase the maximum financing limit from RM750,000 to RM1 million to enable civil servants to purchase more comfortable homes in line with market trends.

“For homes priced above RM1 million, applicants may obtain additional financing from LPPSA’s strategic partners, including BSN, Bank Islam, and Bank Muamalat,” he said.

To strengthen its financing capacity, LPPSA recently secured RM1 billion in funding from HSBC Amanah Malaysia Bhd to support its ability to disburse housing loans to civil servants.

The collaboration marks LPPSA’s first alternative funding initiative through the Islamic Receivables Financing (RF-i) facility, which does not involve a Government Guarantee.

Mohd Farid said the additional financing enhances LPPSA’s ability to meet demand from nearly 1.6 million eligible civil servants.

“This initiative allows LPPSA to play a more significant role in helping civil servants secure housing financing and fulfil their aspirations of owning a home,” he said.

With over 20 years of experience in the banking sector, Mohd Farid noted that LPPSA’s biggest advantage is its fixed profit rate of four per cent throughout the loan period.

“I’m jealous because I’m not eligible. This four per cent rate stays the same and does not increase when the OPR rises. During the 1997 and 1998 crisis, interest rates reached 14 per cent. So this fixed four per cent rate is a major advantage for borrowers,” he said.

Currently, LPPSA manages 771,671 active accounts with financing assets worth RM119 billion. Of this total, about 700,000 borrowers are still serving in the public sector.

“There are 1.7 million civil servants. This means that another million have not borrowed with LPPSA. The growth potential is still huge," he said, adding that LPPSA disburses financing of about RM900 million every month, while monthly collections are between RM700 million and RM800 million.

Mohd Farid advised civil servants to buy houses as early as possible and examine the developer's record before signing any agreement.

“This is a privilege for civil servants. It is only beneficial if used… so don’t delay. Verify the developer and ensure the project can be completed,” he said.

LPPSA also assists borrowers affected by abandoned projects or disasters, such as floods, by offering temporary salary deduction deferrals or reduced instalments while waiting for project recovery.

He added that LPPSA is strengthening governance through the establishment of a Corporate Assurance Department, which integrates risk, compliance, and integrity functions.

“Alhamdulillah, in the five years I have been here, there have been no MACC investigations or integrity issues. That is something we guard closely,” he said.

-- BERNAMA