Thailand
Thailand: Big banks see strong growth in mortgages
Even though property developers are crying foul over the central bank’s tougher loan-to-value (LTV) requirement, some commercial lenders, particularly large ones, still delivered strong mortgage lending growth for the first nine months.
Kasikornbank (KBank) saw its housing loans outstanding at the end of September surge nearly 11% from the end of last year, well above the average industry’s growth of 4%, to 310 billion baht, said Surat Leelataviwat, executive vice-president.
The 11% growth also surpassed the bank’s full-year target at 7% and could be attributed its strategy of shifting focus to provincial and refinancing markets, he said.
It targeted 64 billion baht in new housing loans this year, of which 52 billion has been lent the first nine months, so additional marketing campaigns are not expected in the final quarter, said Mr Surat.
“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,” he said.
Mr Surat said the government’s new property stimulus scheme would support the bank’s mortgage growth this year if the measures can be implemented this year.
KBank focuses on a wide range of customer segments, with houses typically priced at 1-10 million baht per unit.
The government last week approved a new property stimulus package consisting of a property transfer fee cut to 0.01% from 2% and mortgage fee reduction to 0.01% from 1%. The fee reductions apply to homes priced no more than 3 million baht.
According to data compiled by the Bangkok Post, Kiatnakin Bank enjoyed 13.2% growth in its housing loans outstanding to 21.1 billion baht at the end of September from 18.6 billion at the end of last year.
Bank of Ayudhya (BAY) expects single-digit growth in mortgages this year, slowing from double-digit growth in the past few years, said Nathapol Luepromchai, executive vice-president and head of the mortgage division.
The slower growth forecast could be attributed to the sluggish economy and the central bank’s new LTV regulation, implemented from April 1.
BAY, the country’s fifth largest lender by assets, reported its total mortgages rose 5.43% from the end of 2018 to 264 billion baht at the end of September.
He said the government’s new property stimulus measures would help boost the bank’s housing loan growth but at a marginal pace because homes priced above 3 million baht are the bank’s focus.
Apiphan Charoenanusorn, co-president of Siam Commercial Bank, expects mortgage lending in the final three months will improve from the third quarter thanks to seasonal factors.
However, housing loan growth this quarter would be capped as potential homebuyers delay their purchases to next year, awaiting the reduction in the mortgage and transfer fees that will take effect after the Interior Ministry makes a ministerial announcement.
The property stimulus measures are expected to boost demand for homes priced 3 million baht or less, which comprises the biggest slice of the mortgage market, but potential homebuyers may postpone their housing loan applications until next year to take advantage of the fee cuts, she said.
