KUALA LUMPUR, Nov 8 ― The government’s introduction of crowdfunding platforms like FundMyHome as an alternative home financing solution to banks is laudable, property consultancy Knight Frank Malaysia said today.
However, it advised the authorities to be vigilant in checking the profiles of first time home buyers and fund managers to ensure the mortgage crisis that hit the US over too-easy lending does not happen in Malaysia.
“The availability of Property Crowdfunding platforms will make property more accessible for first-time homebuyers who may not easily qualify for bank loans.
“However, there is concern that this may fuel overly lenient lending policies, potentially leading to future subprime situation, a lesson drawn from the United States where homebuyers with inadequate financial capacities were able to secure mortgages,” Knight Frank Malaysia managing director Sarkunan Subramaniam said in a statement.
He urged the Securities Commission especially to be watchful of such crowdfunding platform managers who may be tempted to build up their portfolios too quickly by lending to first-time home buyers with compromised financial credibility as they may not be able to repay their loans later.
Such a scenario could disrupt the property crowdfunding platforms, he added.
“Subsequently, the funds’ portfolios shall be reviewed regularly to ensure that the investors’ investments are secured,” Sarkunan advised.
The crowdfunding platform initiative was announced by Finance Minister Lim Guan Eng during Budget 2019 last Friday and aims to help Malaysians who have been struggling to buy their first property through peer-to-peer money lending.
Prime Minister Tun Dr Mahathir Mohamad launched the first such platform called FundMyHome last Sunday.