Clearing debts, disclosing all sources of income, preparing documents and avoiding rushed applications can reduce the mortgage rejection rate, which rose to an average of 45% in the first quarter, according to financial institutions.
Apirat Sungkharat, senior vice-president of housing and consumer secured loans and marketing at Kasikornbank, said mortgage rejections sometimes stem from hasty efforts by developers and homebuyers when filling out applications.
"They sometimes submit applications without thoroughly reviewing the documents," he said. "When rejected, to reapply for a mortgage you have to start the process over again, which wastes time."
In some cases, homebuyers fail to disclose all debts to the project's sales staff, leading to pre-approvals and applications for loans based on incomplete information.
"Most rejections are due to debt burdens," said Mr Apirat.
He said a simple calculation for a loan of 1 million baht is a monthly payment of 6,500 baht. If no debts exist and the income is double the monthly payment, the chances of approval are high, said Mr Apirat.
The other major factor banks consider is the customer's credit history. However, a lack of debt doesn't necessarily indicate a strong credit history. It could imply no credit history, which means a bank must consider other criteria.
A bank would then look at the customer's background, including their company and job position, he said.
It is essential to communicate all financial details to the bank, including any outstanding loans, said Mr Apirat. Full disclosure helps banks assess a customer's financial capacity accurately.
"Being transparent with the bank makes it easier for loan officers to communicate with the approvers," he said.
"In many cases, once the information is entered into the system, the debt burden exceeds the income, leading to a rejection."
Mr Apirat said customers should trust banks, as they do not share information with others, including the Revenue Department.
Home loan documents are not submitted to the tax authorities. He encouraged homebuyers to be open and prepared, providing all necessary information before applying.
"We haven't adjusted our criteria, but household debt is affecting loan approvals," said Mr Apirat.
"The bank is keen to lend more, with efforts focused on stimulating demand. We want to grow our loan portfolio by 20%, despite high household debt."
He said the bank initially expected this year to be challenging, but when the loan-to-value (LTV) limits were eased and transfer and mortgage fees slashed, it should help to stimulate demand for homes priced less than 7 million baht.
"For homes costing more than 7 million baht, rejection rates are less of a concern. Approvals are smoother as income stability is higher. With the LTV changes, buyers can now purchase homes exceeding 7 million baht more easily," said Mr Apirat.
Pannapat Srikirin, senior vice-president, Bangkok Metropolitan branch department 1 at Government Housing (GH) Bank, said the LTV measure encourages customers to buy homes, as many have inquired about it since the beginning of the year.
"However, credit measures are separate. Customers who are ready can decide quickly, but some still need to wait for their credit approval," she said.
For first-time workers, GH Bank focuses on job stability and consistent income. The bank primarily evaluates income consistency and alignment with the profession, even if there is no credit history.
For those unprepared to apply for loans, GH Bank suggests joining a financial literacy programme, which takes about a year.
These savings programmes help the bank assess potential by showing savings ability, said Ms Pannapat.