No reduction in SCB mortgage loan rate

BANKING

Siam Commercial Bank has no plans to cut its mortgage loan rates, even though interest rates continue to decline.

Siam Commercial Bank has launched a newSCB Easy Bill service to accommodate utility and other monthly payments by simply charging credit card accounts, with no document submission or application forms required. The campaign will run until April 30. For more information, call 0-2777-7777.

Rungruang Sukkirdkijpiboon, an SCB executive vice-president, said the bank's current rates were already low.

The bank currently offers fixed rates between 3% and 5% for the first three years of mortgage loans.

"Based on current spreads for housing loans, we don't really have room to reduce fixed rates for mortgages," he said. "Falling interest rates are coming together with falling demand."

Only 70% of SCB's loan applications now include a fixed-rate component, compared with 80% previously, as borrowers look to floating-rate packages to take advantage of declining interest rates.

The Bank of Thailand yesterday cut its one-day repurchase rate by 50 basis points to 1.5%. Most analysts expect local banks to cut deposit and key lending rates over the next few weeks, and that market rates have further room to decline as authorities move to bolster economic growth.

Mr Rungruang said even with 3 billion baht in new loans in January, the bank's housing loan portfolio remained unchanged from the year before.

The slowing economy and the weak housing market are affecting demand for housing loans. SCB has a target of 53-55 billion baht in new loans this year, representing growth of 20-25% on its current mortgage portfolio of 220 billion baht.

For the first quarter, the bank has a loan target of 12 billion baht. Second-half lending trends are expected to improve due to seasonal factors and the prime impact of the government's economic stimulus programme, which includes new tax deductions for homebuyers.

The bank aims to keep its non-performing loans from rising above 3% of total loans this year from their current level of 2.4%.

Mr Rungruang said lending standards have tightened as the economy slows. Approval rates for home loan applications have fallen in recent months to 75-80% from 80-85% last year.