Published on November 18, 2005

Home-buyers should not panic about interest rate rises next year as the burden of their housing-loan repayments will not increase much, Charlotte Donavani, first executive vice president of Bank of Ayudhya, said yesterday.

Interest rates may rise by about 1 to 2 percentage points, and every percentage-point increase would add 7 per cent to the monthly repayment on mortgage loans, she said at a seminar on the outlook for the property market in 2006. New home-buyers, however, may have fewer financial-service options next year as fixed-rate housing loans may no longer be available, she added.

Rising rates and fewer financial options may force new buyers to purchase smaller houses, such as homes priced at Bt4 million, instead of their intended spending of Bt5 million.

Charlotte says that banks will continue to provide housing loans but growth will be lower, at about 5 per cent.

Thawatchai Suthikijpisan, president of Kiatnakin Bank, said some small land developers could exit the scene, mainly due to a slowdown in the housing market, hurt by rising oil prices and interest rates.

Wichit Chaitrong, The Nation

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