Home loan denials increase to 20% on household debt

Home loan denials increase to 20% on household debt

The overall rejection rate of housing loan applications is now 20%, up from 12% early in the year, due to higher household debt incurred largely by the first-time car buyer scheme, says the Thai Condominium Association (TCA).

Apa Ataboonwongse, vice-president and secretary-general of the TCA, said most first-time car buyers are at the same level as homebuyers for units priced from 1-3 million baht.

This price range constitutes the biggest group of rejected home loan applications this year, Mrs Apa said after yesterday's meeting of the TCA with major commercial banks.

"Many who bought a first car last year and intended to buy a home this year were unable to secure a home loan, as their payment ability was reduced by monthly payments for the car," she said.

For a home loan to be approved by the banks, some applicants had to find co-borrowers, while others put up a large sum of cash for the down payment.

Mrs Apa, also the president of property developer Richy Place 2002 Co, said a few of her company's condo customers were rejected by banks after applying for a home loan.

Kasikornbank told the TCA that it recently found a higher number of non-performing loans (NPLs) in townhouses, whose buyers are often small-business owners with inconsistent income.

Condo buyers with a regular salary had a better showing with only 1-2% deemed NPLs.

"The situation changes very fast," said Mrs Apa. "In recent months condo sales slowed, but they improved this month. We expect much better sentiment in the fourth quarter, the property market's high season."

State banks, the leaders in the segment, insist there are no signs of rising bad loans at the moment.

Angkana Chaimanat, president of the state-owned Government Housing Bank, said applications for mortgages at GH Bank rose by 32% year-on-year in the first six months to 57.6 billion baht.

The rejection rate was less than 10%, a normal reading for GH Bank.

Its main borrowers are low- and middle-income earners.

Woravit Chailimpamontri, president of the Government Savings Bank, said the GSB's's housing loan portfolio is growing at a healthy pace.

Outstanding home loans make up 200 billion baht or 13% of all outstanding loans, while NPLs are 1% of the total loan portfolio.

In related news, Richy Place 2002 plans to file for listing on the Stock Exchange of Thailand by year-end or early next year, with Country Group Securities as the financial adviser. Next Monday it will increase registered capital to 500 million baht from the current 370 million.

In 2014, Richy Place will launch five new condo projects near mass transit lines with a total sales value of 7.5 billion baht. The firm will spend 2.5 billion baht to buy new plots of land.

It expects 3 billion baht in sales and 2 billion in revenue this year, of which 95% will be from condos.

Last year it recorded 500 million baht in revenue and 2 billion in sales.

Next Monday will see the launch of Rich Park@Chaophraya, a new condo project worth 1.5 billion baht on three rai in the Rattanathibet area near the future Purple Line's Sai Ma station.

The complex will include a 33-storey building with 633 units sized from 28-32 square metres and priced from 52,000 baht per sq m.

Also in store is a duplex housing project worth 700 million baht on Ratchaphruek Road.

It will launch in the fourth quarter with 135 units priced from 3.7 million baht.

In the first eight months of this year, Richy Place launched a condo project worth 2 billion baht in the Tao Pun area and a townhouse project worth 600 million baht on Sukhumvit Soi 105, recording sales rates of 70% and 30%, respectively.

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