State-owned GH Bank wants to slash the mortgage rate for the 1-million-unit low-cost government housing scheme to below 3% and lengthen the maximum housing loan term to 50 years from 40 years.
The changes are aimed at reducing the repayment liability for borrowers of the cheap home loan scheme to below the programme's minimum monthly payment requirement of 3,800 baht, said president Chatchai Sirilai.
If the bank's upcoming issuance of savings lotteries worth 100 billion baht has an average cost of 1.7-1.8% per year, GH Bank can offer interest rates below 3% for mortgages to accommodate the scheme, he said.
The three-year savings lotteries will be divided into three batches of 30 billion baht, 20 billion and 50 billion, with the first lot expected to be launched in September.
Mr Chatchai said 30% of the 59,000 applicants for the scheme's first mortgage phase cannot afford the minimum payment of 3,800 baht a month. They have repayment ability in a range of 2,800-3,000 baht a month, he said.
To make the housing scheme affordable, GH Bank will seek a 2.4-billion-baht budget from the government for six years of subsidies, said Mr Chatchai. The bank will propose extending the repayment period to 50 years from 40 if the request for a subsidy fails.
He said 4,000 of 59,000 applicants have been approved. The approved borrowers sought mortgages worth 2 billion baht in total.
The bank earmarked 60 billion baht in loans under the first phase of the low-cost government housing scheme, aimed at letting low-income earners own their own home. Of the total, 50 billion baht is for housing loans to borrowers, with 10 billion for project financing for developers to build the projects.
GH Bank also allocated 10 billion baht of the 50 billion in home loans to borrowers responsible for taking care of parents, who will get a haircut on the principal if they manage to service the debt for a certain period, said Mr Chatchai.
For example, the bank could slash debt principal by 500 baht if they pay off the debt for three years.
"We can subsidise this without asking for government aid," he said.
Deputy Prime Minister Somkid Jatusripitak instructed GH Bank to complete the loan scrutiny process for the 59,000 applicants within four months before the second phase starts in September.
Low-income earners, particularly those who must take care of parents, remain a priority for the second phase, he said.
GH Bank should consider offering special mortgages to those who are starting families, looking to buy homes priced more than 1 million baht, said Mr Somkid.