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NEWS UPDATES Asean Affairs           28   July  2011

New Thai mortgage plan to cost plenty

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The zero-interest mortgages promised by the victorious Pheu Thai Party may affect the Government Housing Bank's need to raise new funding to finance the scheme, according to bank president Voravit Chailimpamontri.

During the campaign, Pheu Thai promised that first-time homebuyers would be able to obtain mortgages at zero interest for the first two years, but it is not clear yet whether there will be a limit on price per unit for the programme.

The outgoing Democrat-led government scheme offered a similar programme, with GH Bank providing zero-interest mortgages for the first two years for first-time buyers of houses costing less than 3 million baht (US$100 thousand).

The bank said that if the new government wanted to extend the benefit for homes up to 5 million baht in value, funding of at least 50 billion baht would be required.

Under the previous scheme, GH Bank received 25 billion baht in funding and the loan budget ran out, with approvals of 11 billion. Interest income lost from the scheme was 700 million baht.

GH Bank is also prepared to raise its lending rates next week to cope with rising financial costs resulting from the Bank of Thailand's policy rate increases, said Mr. Voravit. But he added GH Bank was raising rates at a slower pace than commercial banks.

Over the first six months of this year, GH Bank increased its deposit rate by 1.50 points to match commercial banks, but lifted its lending rate only 0.325 points, affecting its funding structure.

Mr. Voravit insisted that a full percentage point increase in the lending rate, if it chooses to make that move, would not burden clients that much. Those who are affected could reschedule loans to reduce monthly payments.

The state bank's current minimum retail and minimum lending rates are 6.875%, with the minimum overdraft rate 7.875 percent.

Even though building material prices are rising, housing prices may not follow because of strong competition in the property market, said Mr Voravit.

For the first half of 2011 the bank's new lending totalled 49.8 billion baht, on target to meet or exceed the full-year goal of 99 billion.

Total housing loan growth this year is estimated at 330 billion baht, he said, lower than last year when it reached 377 billion.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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