Banks urged to ease tight loan rules to help market

Thai Condominium Association

Thai Condominium Association

Commercial banks should loosen their home-loan approval conditions including income and employment requirements in order to help the property industry, suggests Atip Bijanonda, president of the Thai Condominium Association.

Due to the global financial crisis, many banks in Thailand have tightened screening of mortgage applicants for fear of non-performing loans (NPLs), which is hurting the property market, he said.

“Home loans are vital as people still need to buy homes for living. With the banks being too careful letting out loans, the economic cycle would be halted,” said Mr Atip, the deputy managing director of the listed developer Supalai Plc.

He said tighter restrictions should be applied instead on credit cards as many homebuyers with credit-card debt were rejected by the banks.

“The credit bureau should reasonably classify customers as loan requests of some customers could be rejected only because of credit card debt worth as little as 5,000 baht,” he said.

About 20% of home loan applications are rejected currently.

Mr Atip also said interest rates should be cut by at least 50 basis point this year to stimulate the property market.

He said the market next year would be affected by reduced purchasing power as people became more insecure about their financial status.

However, Mr Atip expressed no concerns over the condominium market outlook, saying that prices vary and can support buyers at all income levels.

“Prices of condos next year should be stable due in part to lower construction costs. But there could be some price adjustment depending on the project locations,” Mr Atip said.

Manop Bongsadadt, a lecturer at Chulalongkorn University’s Faculty of Architecture, said the Bank of Thailand should loosen the non-performing loan reserve standard to ease the credit crunch.

He said banks should separate borrowers into three groups based on their credit quality as low, medium and high-risk.

Developers should help guarantee loans of customers with medium credit risk while borrowers with poor credit history or those with NPLs should be tenants instead of buyers, he said.

About the author

Nina Suebsukcharoen Nina Suebsukcharoen
Nina Suebsukcharoen is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in the property and real estate sector.
Other posts by Nina Suebsukcharoen ( 32 )

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