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Home loan growth to stay slow amid high household debt

Despite the bright economic outlook, lenders will continue to see slow growth in the mortgage segment as long as the level of household debt stays high, said Chatchai Payuhanaveechai, secretary-general of the Housing Finance Association.

Household debt is a worry for mortgage lenders because it has grown faster than the economy during the past few years.

Household debt this year is expected to reach 84.5 per cent of gross domestic product, up from 82.5 per cent last year and 77 per cent in 2012, Chatchai said.

Housing loans this year are expected to grow by about 7-9 per cent, he said.

Another challenge is the lower supply of new housing, which will become significant from 2016 onwards because the supply of condominiums has been decreasing since late last year.

It is expected that growth in mortgage lending will be higher in the provinces than in Bangkok because incomes upcountry are higher than before, and big property developers are focusing on the provincial markets.

The association together with Home Buyers Guide yesterday opened the annual "NPA & Resale Home" fair, along with "Home Loan & Consumer Credit 2014" and "Home Buyers' Expo 2014", at Queen Sirikit Convention Centre in Bangkok.

It runs until Sunday.

Chatchai said the event was expected to enhance mortgage lending during the rest of the year.

Chatchai, who is also an executive vice president of Kasikornbank, said zero-interest gimmicks would still be seen at the fair in order to attract buyers, but would only be offered to low-risk customers.

Outside the fair, KBank might offer zero-interest packages to people who buy from big developers that want to deliver their homes to buyers quickly, he said.


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