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PROPERTY
SOMRUEDI BANCHONGDUANG
Consumers study offers at the Home Builder 2008 fair, now being held at the Queen Sirikit National Convention Center. |
Homebuyers should speed up decisions on purchases before interest rates and housing prices rise again in the near future, say property and banking executives.
''Fixed-rate housing loans are expected to increase by one percent for this year pressured by rising deposit rates,'' said Chatchai Payuhanaveechai, first senior vice-president of Kasikornbank.
Bank deposit rates have been rising significantly in line with heavy competition for fund mobilisation, which has led to a higher cost of funds in the banking sector.
Mortgage loan fixed-interest rates rose by 50 basis points in the first half this year, and would increase by another 50 basis points in the second half, he said.
Lending rates would start to increase in the early fourth quarter by around 25-50 basis points. Each one-percent interest rate increase would affect a homebuyer's purchasing power by six percent. As a result, customers should buy a lower-priced unit to handle higher interest rates, he said.
Mr Chatchai said home prices had increased by around 20%, in line with construction materials that rose roughly 20-40%.
The rising rates and house prices should encourage homebuyers to speed up decisions on home purchases while the government's tax measures would continue to support the growth of home loans in the second half.
Normally, there is a seasonal factor affecting housing loan expansion in the second half. Kasikornbank expects home loan applications in the second half would increase to around 55-60% of total loan applications, up from 40-45% in the first half.
The bank hopes to outperform its 20% mortgage loan growth target for this year, while typical loan growth in the commercial bank industry is expected to be 12-13% in 2008.
KBank is ranked fourth in Thailand in total assets and in housing loans, but they aim to grow consumer loans by 30 billion baht this year. The bank lent 21 billion baht for the first seven months of the year, he said.
Competition for mortgage loans in the second half is expected to be tougher than the first half due partly to seasonal factors. However, Mr Chatchai said the intensified competition would not impact KBank's home loan refinancing.
The bank's debt refinancing rate is low at 1% or around 20-30 accounts per month from a total customer base of 80,000 now.
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