LTV tweak to help market recover
Calls for change to co-sign requirement
The housing market is likely to recover if a home loan co-signer is considered a first-time borrower under the loan-to-value (LTV) rules, says SET-listed developer Supalai Plc (SPALI).
Tritecha Tangmatitham, Supalai's managing director, said 20-30% of the company's customers are mortgage co-signers.
"Under the LTV rules, these co-signers are regarded as the borrower of second and subsequent mortgages when they apply for a home loan," he said.
According to the LTV regulations that took effect on April 1, homebuyers are required to make a minimum down payment for the second mortgage of 10-20% of housing price. A mortgage co-signer is regarded as a borrower.
With the new regulations in effect, half of homebuyers who are co-signers were unable to get a home loan because of the higher down payment, Mr Tritecha said.
"Mortgage co-signers should not be regarded as borrowers because they are not the main borrowers," he said. "If this rule is relaxed, it can help co-signers with real demand own a unit."
Mr Tritecha said most homebuyers who need a co-signer when applying for a mortgage buy a residential unit priced at 2-3 million baht.
Though the property market in the first half was gloomy, dampened by the LTV limits, Supalai is maintaining revenue and presales targets in 2019 and will launch new projects this year worth a combined 40 billion baht as earlier announced.
By the end of the year, Supalai expects to have 28 billion baht in revenue, up from 25.8 billion baht in 2018. In the first half, it reported a net profit of 2.29 billion baht, up 1%, on revenue of 10.9 billion baht, down 1%.
Gross margin was 38.8%, up from 36.8% in the same period last year. Net profit margin rose to 21.1% from 20.5%.
Presales in the first half fell by 23% to 13.3 billion baht. Supalai aims to have 35 billion baht by year-end, up 5% from 2018.
Of the first-half presales, 39% came from Bangkok condos, 31% from single houses and townhouses in Bangkok, 25% from single houses and townhouses in provinces and 5% from provincial condos.
"It's not an easy year, but the market passed its nadir in the second quarter," Mr Tritecha. "We need to adjust strategies like bundling necessary items into units in order to help some homebuyers get a mortgage loan easier."
He said a decrease in interest rates could help boost housing demand by 1.5-2% in the second half.
As of the end of June, Supalai had a sales backlog totalling 43.43 billion baht, of which 10.19 billion baht will be realised in the second half.
SPALI shares closed yesterday on the Stock Exchange of Thailand at 20.30 baht, down 50 satang, in trade worth 181 million baht.