We will start with a very brief recap of the key parameters of FMH. There is a broadly held perception that homes are increasingly unaffordable because prices have far outpaced income growth, therefore making it extremely difficult for prospective homeowners who cannot afford to buy one now to ever catch up. In fact, this perception is not true for the average Malaysian household, and we will explain in the following paragraphs. But yes, there are groups of people who do have difficulty making the minimum 10% down payment and getting mortgages, including lower-income households and the younger generation, particularly those just entering the workforce. Their incomes and savings will rise with time, as will their eligibility for a mortgage, but then so will home prices.
A little over six years ago, EdgeProp Malaysia launched a new product called FundMyHome (FMH). It was an innovative, out-of-the-box financing solution to address a long-running problem — the rising unaffordability of homeownership in Malaysia. Tan Sri Wan Azmi Wan Hamzah and I invested some RM10 million of our own money to ensure that the project could be executed. It was a proof of concept. FMH was intended to be a bridging financing lasting five years from the signing of the sale and purchase agreement (SPA). At the end of this period, the homeowners were expected to secure and switch over to a traditional mortgage for their homes. Now that the five-year period has come to an end, we want to share the outcome and, more importantly, the implications and lessons we can take away from this project.
The key parameters and objective of FMH
