THE country’s sustained economic recovery and government policies to encourage home ownership will boost demand for mortgages this year, says Government Housing Bank (GHB), prompting it set a bullish loan-growth target of 6 per cent for this year.
Chatchai Sirilai, president of the state-owned lender, said GHB planned to write loans for Bt189 billion this year, representing a 6 per cent rise from last year’s lending target of Bt178.2 billion. The bank would keep its lending rates low until at least the end of the second quarter, he said.
The economic recovery will lead to high demand for housing loans among consumers, he said. Many economic research houses forecast gross domestic growth rate of more than 4 per cent for this year, slightly higher than last year estimated 3.9 per cent to 4 per cent expansion. Housing loans showed signs of expansion in the last quarter of last year after flat growth in the previous three quarters, he said.
Chatchai expected commercial banks would start to offer more housing loans after their cautious approach that saw heightened screening of loan applicants amid concerns that non-performing loans would increase.
GHB has the country’s largest share of mortgages, accounting for about 28 per cent of the market value.
“We aim to have a third of mortgage lending in the next few years,” said Chatchai. The bank last year saw new lending rise 17 per cent year on year to Bt 196.8 billion, leading to a rise in the value of total outstanding loans to Bt 1.1 trillion - the first time the bank had crossed the trillion-baht mark for this metric.
The government policies to help consumers gain their own homes will also contribute to a rise in loan values this year, Chatchai said.
GHB launched its “Home for All’ programme last year with a target of Bt100 billion in loans to support people in lower and middle-income groups get on the property ladder.
Applications for loans valued at Bt16 billion are awaiting final processing from last year. The leftover applications from last year are expected to be approved by the end of this month, Chatchai said.
Loans worth Bt60 billion are earmarked for supporting those whose income is no more than Bt 25,000 a month with mortgage rate at 2.75 per cent annually, fixed for four years. Another loan package is for state officials with a minimum retail rate (MRR) of minus 3.75 per cent, or a fixed 3 per cent for the first four years of the contract.
Asked about interest rate trends, Chatchai said the bank would not increase deposit and lending rates in the first quarter of this year.
“We will maintain our lending rate unchanged into the second quarter. After that, we will look at how market rate costs our operation,” he said.
The market expects domestic interest rates to increase this year, largely influenced by global market rates and liquidity conditions as US Federal Reserve plans to increase its policy rate three times this year.
So far, GHB has adequate liquidity to support its lending target, Chatchai said, adding that the bank plans to raise funds via a lottery-style promotion that will reward winners with cash placed in GHB savings accounts.
The plan is awaiting approval from the State Council, the government’s legal adviser. The bank plans to reduce its non-performing loan to 4 per cent of total loans, from 4.21 per cent last year.
The bank’s bad loans totalled Bt 43.1 billion last year. It made a profit of Bt 11.78 billion that year and targets Bt12.4 billion in profit this year. The bank’s BIS capital adequacy ratio is 14.9 per cent, compared with the 8.5 per cent minimum requirement set by the Bank of Thailand, Chatchai said.