Whilst property developers are complaining about high levels of mortgage rejections, (primarily due to the stricter loan-to-value requirements as laid out by the Bank of Thailand), most large banks are showing signs of increased mortgage activity overall.
The main difference is that property developers often have properties in Bangkok, which are facing difficulties with the new rules, whilst banks have diversified to provincial areas and also to refinancing existing loans.
As such, a dichotomy appears to be presenting itself. It could be simply that prices of condos in Bangkok are falling foul of the new Bank of Thailand rulesas compared to properties outside of the capital. Also the rental market is not a guaranteed source of income since it can take time to find a tenant for a high-end property in Bangkok.
Yet for other markets things are on a positive footing. Kasikorn Bank reported that mortgages increased by almost10.7 per cent from the end of last year to this September. The make up of the mortgage business was varied with properties usually valued anywhere within a 1-10 million baht price range.
The bank doesn’t expect to run any promotions for the rest of the year since it has already surpassed 9-month targets. KasikornBank’s executive vice-president, Surat Leelataviwat, was quoted as saying, “However, the bank plans to expand its salaried-employee customer base to 60% of our new home loan applicants from 50% now, in line with risk management strategy.”
Kasikorn bank expects the government stimulus package, which includes heavily discounted transfer and mortgage fees to help the market, especially for properties valued at 3 million baht or less.
The stimulus package has reduced transfer fees from 2 per cent to 0.01 per cent and also reduced mortgage fees down from 1 per cent to 0.01 per cent on all properties below the aforementioned threshold. That is a saving of almost 3 per cent of the purchase price of a property. On a 3 million baht property being purchased with a mortgage that would equate to a heft saving of nearly 90,000 baht in fees alone.
Other banks have in the main also seen an increase in mortgage lending activity.
Bangkok Bank saw an increase of 2.89 per cent in its mortgage lending business over the same period, whilst T-bank saw an increase of 4.87 per cent. Siam Commercial bank just scraped through with a gain, standing at 1.09 per cent.
Bank of Ayudhyasaw an increase of 5.43 per cent from the end of last year to the end of September 2019. This was slower growth as compared to last year as more stringent loan to value ratios began to take effect in April 2019, mimicking the same slowdown seen by Bangkok based developers. The bank has less focus on the sub 3 million baht property market, with most of the propertiesit deals with priced above this level. Thus it is expects that the government stimulus measures wont be significant in bringing a major uptick to its mortgage lending growth rate.
Kiatnakin Bank saw a whopping 13.2% growth in its mortgage business over the period with a total of 21.1 billion baht lent as of the end of September 2019.
Only LH Bank and Tisco Bank saw declines, which were –7.78 per cent and -11.6 percent respectively.
