GH Bank jittery over rate hikes
Government Housing Bank (GH Bank) is concerned the global trend of interest rate hikes will affect its mortgage customers, says president Chatchai Sirilai.
Interest rates in many developed nations are projected to rise this year, said Mr Chatchai.
The US Federal Reserve is expected to raise its interest rate this year, which could impact Thailand's Monetary Policy Committee (MPC) in its policy rate management, he said.
Mr Chatchai said the MPC might not raise its rate when the Fed makes its first hike this year. But if the Fed raises its rate two or three times in a row this year, this may nudge the MPC to increase its rate earlier than expected.
If the MPC does hike the rate, GH Bank will have to raise its loan interest rate accordingly, he said.
If the bank raises the mortgage loan interest rate by 0.25%, instalment payments would increase by an additional 500 baht for every 1 million baht borrowed, said Mr Chatchai.
He estimated 35% of GH Bank's customers, comprising a loan portfolio of 1.4 trillion baht, would be affected by this increase in instalment payments. Of this group of borrowers, half are customers on a fixed income, while the other half are freelancers.
Mr Chatchai said he was concerned most with the latter and whether the bank would have to adjust the interest rate.
GH Bank targets new loan growth of 3-5% this year from the 2021 target of 215 billion baht, he said.
The bank aims to keep non-performing loans below 5%, compared with 4% at the end of last year.
Last year GH Bank provided new loans worth 247 billion baht, up 9.65% from the year before and higher than the target by 31.2 billion.
The bank's lending tally last year was the highest in 68 years, attributed mainly to its low interest rate and the government's support measures to ease the burden of homebuyers, Mr Chatchai said. Property developers also lowered their house prices, allowing more people to buy houses priced over 2 million baht, he said.
As commercial banks stick to cautious lending policies focused on premium customers, more lower-income customers have turned to GH Bank, said Mr Chatchai.