Property firms must inspect home-buyers' financial status before making a purchase agreement, since commercial banks are now rejecting their presales home-buyers at a rate of up to 30 per cent, said speakers at a recent seminar jointly organised by the Thai Condominium Association and the Housing Estate Association.

The seminar, entitled "How to Prepare Home-Buyers' Financial Status and Quality to Meet Bank Standards", was held on Tuesday in Bangkok's Sofitel Central Plaza Hotel.

Thai Credit Retail Bank CEO Mongkol Lelatham said up to 30 per cent of home-buyers' applications for bank mortgage loans were unqualified to receive approval, mostly due to a financial history of non-performing loans that showed up at the Credit Bureau.

"We want to approve more mortgage loans for our customers, because we have processing costs to consider of up to Bt10,000 per case," he said. "But we also must be concerned about whether our customers' credit has the potential to become non-performing loans in the future. As a result, we have to make sure that our customers are qualified to meet our standards."

A major stake in Thai Credit Retail Bank is held by Thai Life Insurance. The bank expects loans worth Bt1 billion in this first year of operation.

Kasikornbank senior vice president Chatchai Payuhanaveechai accepted that banks must reject 25-30 per cent of mortgage-loan applications for not meeting the bank's standards.

However, if property developers screened their customers before sending them to the bank, this would help the bank approve mortgage loans.

Meechai Kongsangchai, head of retail management at Siam Commercial Bank, said the main qualifications for home-buyers to succeed in obtaining mortgage loans were a clean name at the Credit Bureau and a financial income sufficient to repay the loan.

"We learned from the economic crisis in 1997 to be cautious with new mortgage loans. Meanwhile, Thailand's economy this year show signs of slight growth, and as a result we have to take care to exercise due diligence concerning our customers' financial status before approval," he said.

Thai Condominium Association president Atip Bijanonda said bank rejections of up to 30 per cent of total home-buyers have had a negative impact on the property market, because firms must resell the projects again. As a result, the property market has had more supply than demand in this year's first quarter.

Housing Estate Association president Prasong Aowlarn said property firms had to recheck their customers before sending them to the bank in a process called "preapproval", because they did not want to have to resell the projects yet again.

"We'll see more property projects recording more sales in the presale period, but the projects have to be resold again, because the banks

did not approve the mortgage loans for their customers," he said.

Research by Raimon Land shows that total unsold inner-city Bangkok condos at the end of last year stood at 5,037 units worth Bt37.4 billion. These figures cover only condominium projects priced up to Bt2 million per unit. "Inner-city Bangkok" includes the areas of Sathorn, Sukhumvit, central Lumpini, Silom, the riverside, Rama III and Phya Thai.

The Sukhumvit Road area is the main location for unsold condominium projects, Bt13.3 billion worth, or 35 per cent of total unsold units. This is followed by Silom/Sathorn, Bt8.7 billion; the riverside, Bt6.9 billion; central Lumpini, Bt5.6 billion; and Phya Thai and Rama III, 1.5 billion each.

Somluck Srimalee

The Nation