GOVERNMENT Housing Bank (GHB) is calling on the Finance Ministry to introduce measures to boost the property market in response to loan-tightening measures that came into effect last month.
The bank’s president Chatchai Sirilai said the value of home loans written out by GHB had plunged 35 per cent drop since the introduction of new loan-to-value (LTV) ratios on April 1, highlighting the need to shore up the residential market.
Under the measures, the loan value for buyers of a first home has been reduced to about 90 per cent of the value of the property; for second homes, the loan value has been limited to 80 per cent of the property value; and for third homes, the loan limit has been set at 70 per cent.
In April, the first month of the new measures, the value of home loans extended by the bank has dropped 35 per cent from the same month last year, to only Bt9 billion.
From May 1 to 15, the bank has approved just Bt4.5 billion in loans, also representing a drop of 35 per cent from the same period last year, Chatchai said.
He said the measures had directly impacted the property sector and, for the bank, it meant that GHB would not be able to meet its loan target of Bt203 billion for this year if the government does not bring in market-supporting initiatives or discuss ways to ease the loan rules with the Bank of Thailand.
“We cannot say what we proposed. However, the Finance Ministry has to discuss ways with the Bank of Thailand on how it can revise the measures. If no new measures are introduced to boost the market in the second half of this year, our new loans may end up being lower than our early target,” Chatchai said.
GHB said its new mortgages for the year to May 15 came to Bt57.54 billion. The bank expects its new mortgage loans will reach Bt100 billion in the first half of this year, on expectations of government measures to boost the property market.
The bank had outstanding loans of Bt1.128 trillion at the end of March, up 7.88 per cent from the same period of last year. Its non-performing loans stood at Bt49.295 billion at March 31, or 4.37 per cent of its total outstanding loans. This marks a rise of 0.03 per cent from the end of 2018.
The bank also plans to introduce what it calls a savings lottery, worth Bt107 billion over this year and the next. This is part of efforts to reduce the bank’s financial costs from 2.04 per cent to 1.7 per cent.
“We are issuing the savings lottery as a funding exercise that reduces our financial cost for mortgage loans, which will be offered for lower-income people who buy homes priced below Bt1 million,” Chatchai said.
“They will get an interest rate for the mortgage loan of not over 3 per cent, compared with general customers who will get a loan with interest of 4.5-6 per cent. The loans for the general customers will draw on the capital from our normal business.”
It is planned that the first phase of the three-year saving lottery will be in September; it will be worth Bt27 billion with an interest rate of 1.4 per cent and be offered under a Bt1 million per savings lottery.
Chatchai said that the customers participating in the savings lottery will get the opportunity to win in a lucky draw worth up to Bt200,000 a month. The second phase, worth Bt30 billion, will be sold at Bt10 million per savings lottery and is likely to be issued at the end of this year or in the first quarter of next year. The last phase, worth Bt50 billion, will be offered to customers at a price of Bt500 per savings lottery next year, Chatchai said.
The bank has approved a loan package for lower-income earners totally 6,300 contracts who buy a home priced at under Bt1 million. Under the promotion, one million residential units will be offered to people in this income group under a government policy launched on January 2.
Some 6,300 contracts worth Bt4.3 billion have been signed; 127,000 people had registered to apply for the loans.
The bank plans to invite more customers to register their interest in the campaign in September, with the subsequent loans issued to be covered under the Bt50 billion budget for the scheme.
“The Cabinet has already to approved the extension of the period of this campaign from the end of this year to 2021. This will provide time for lower-income customers to improve their financial situation in order to secure a loan when the bank launches the latest measures to help them,” Chatchai said.