Siam Commercial Bank (SCB), the country's biggest mortgage lender, has raised its introductory rate on housing loans and will raise its auto loan rate by 50-100 basis points from mid-August, reinforcing signs that local interest rates are creeping up.
The bank's teaser rate has been increased by five basis points from the previous quarter, in line with SCB's policy to widen housing loan margins, said Apiphan Charoenanusorn, senior executive vice-president and head of retail lending products, retail payments and facility management.
The rate hike is expected to deliver better returns for the bank starting next year, she said.
Positive mortgage demand in line with robust economic growth has allowed the bank to lift the introductory rate.
SCB managed to achieve its lending growth target for new mortgages in the six months to June, Mrs Apiphan said.
The bank's goal is 120 billion baht in new housing loans for the full year.
SCB's mortgages outstanding rose by 1.1% from the end of 2017 to 636.7 billion baht at the end of June.
"The margin for housing loans is quite thin, and we want to widen it," Mrs Apiphan said. "With the bank's large housing loan portfolio and a marginal rate hike, it will take time to see larger yields because the higher rate is applied only to new loan applicants."
Despite the rate increase, SCB is still offering a fixed rate throughout the three-year teaser period.
Meanwhile, the bank will follow leading players in raising its auto loan rate by 50-100 basis points, effective Aug 15.
SCB's flat rate for new cars is set in a range of 2.5-3.5%. The bank's auto loan portfolio jumped 6.8% from the end of last year to 193.18 billion baht at the end of June.
Bank of Ayudhya auto loan unit Krungsri Auto and Thanachart Bank recently increased their auto loan rates to offset narrower margins after the Office of the Consumer Protection Board cut the maximum penalty fee for late auto loan payments from 17% to 15%, effective July 1.
SCB shares closed Friday on the Stock Exchange of Thailand at 141.50 baht, up 50 satang, in trade worth 1.8 billion baht.