The loan-rejection rate at the state-owned Government Housing Bank (GHB) doubled last year to 20-30 per cent of applicants, from 10-15 per cent in 2004, reflecting a deterioration in people's ability to service their debts.

"The loan-rejection rate increased significantly from 2004, when the domestic interest rate was yet to be raised. The main cause for rejection is attributed to the increasing number of bad debts resulting from a higher debt burden by borrowers in the personal-loan category. The bank has decided to tackle the issue by asking loan seekers to buy cheaper homes or seek additional co-borrowers," president Khan Prachuabmoh said yesterday.

Apart from the GHB, Krungthai Card Plc (KTC), which is one of Thailand's leading credit-card issuers, and Bangkok Bank had earlier said their credit-card rejection rate had significantly increased.

Khan also said that the National Real Estate Information Centre sponsored by the bank would soon release the results of a survey on Thailand's Potential Resident Possession Index.

"The index would come as a boon to all relevant parties, including the National Housing Authority, property developers and the government," said Khan.

He said real estate with price tags above Bt5 million were hardly selling at the moment, while those under Bt3 million were doing quite well.

The bank extended loans worth more than Bt10 billion last month and expects its lending amount to stay between Bt8 billion and Bt9 billion this year.

"People are hesitant about buying houses, because of the higher cost of living. We might have to revise our loan target to match those with low purchasing power," said Khan.

Pongsak Chiwacharat, the National Real Estate Information Centre's outgoing director, said 186,000 second-hand home items, such as furniture and appliances, are placed on sale through www.resalehomethai.com.

"Around 10,000 items [available through the website] are sold, and transactions average Bt3 million per month. This is a good trend for the used-residence market," he said.

Meanwhile, the GHB announced the appointment of former Thai Credit Bureau president Samma Kitsin as the centre's new director. Samma will take on Pongsak's existing duties, including researching the effects that stopping construction of large buildings would have on the bank.