GH Bank to launch savings lottery by August

GH Bank to launch savings lottery by August

State-owned GH Bank is set to launch its first savings lottery worth 50 billion baht by August, hoping to raise funds cheaply to lower its financial costs.

The bank plans to issue three- and five-year lotteries linked with savings products to better match its mortgages' maturities, said president Chatchai Sirilai. The savings lotteries will be priced at 100 and 500 baht each.

GH Bank also wants to sell a premium savings lottery with a 10-year tenor at a price of 1 million baht each.

The savings lottery proceeds can be inherited by heirs.

The National Legislative Assembly recently approved the amended Government Housing Bank Act to enable the state-run mortgage lender to mobilise funds by issuing a savings lottery and allocating bonds without the Public Debt Management Office's (PDMO) approval, as is required now.

The amended law is expected to take effect this quarter, he said.

Mr Chatchai said allowing the bank to issue bonds without the approval of PDMO and the cabinet, a process that takes 4-5 months, will help GH Bank offer bonds in a timely manner, better matching the bank's promotional packages.

Moreover, it will allow GH Bank to extend the period of its fixed mortgage rate as long as five years from only two years currently.

The bank normally issues new bonds worth 20-30 billion baht a year to refinance its retiring ones. Its outstanding bonds amount to 100 billion baht.

Issuing bonds without the approval of PDMO and the cabinet and offering savings lottery are estimated to help the bank slim down its deposits cost to 1.9% from 2.09% at the moment.

GH Bank also plans to provide a 1-billion-baht reverse mortgage scheme with a 20-year maturity to senior citizens aged 60 and older.

Those who apply for the reverse mortgage will be eligible to get 50% of their home value and they are able to live in their home until they die.

Based on a home with market price of 2.4 million baht, the owner is able to borrow 1.2 million from the bank, which will pay them 4,000 baht a month for 20 years.

Reverse mortgages allow elderly homeowners to convert their home equity into cash with no loan repayments until the borrower dies to help cover monthly living expenses and healthcare costs.

Do you like the content of this article?
COMMENT