2008-04-21 00:00:00 -
via:
Apr. 21--Competition in the home mortgage segment has picked up thanks to improved sentiment in the property market.
Improved economic growth, new mass-transit programmes and the government's property stimulus package last month have all helped expand activity in the market, according to local analysts. The property stimulus package includes tax reductions that took effect on March 28 reducing the mortgage transfer and registration fees for land, houses, townhouses, office buildings and condos to 0.01 percent from 0.1 percent. The reductions have led to increased activity among local banks competing to build their mortgage loan books, particularly among smaller banks such as Standard Chartered and Thai Credit Retail Bank.
Larger banks such as Siam City Bank and Siam Commercial Bank are responding by tweaking their current offerings to maintain their customer base. Siam City Bank recently cut its refinancing charges to a flat fee of 5,000 baht instead of the normal 1 percent penalty assessed on borrowers. Chaiyanand Lapitananuyat, an SCIB executive vice-president, said customers typically refinanced mortgage loans after their fixed-rate promotion periods expired. He said that even though transfer fees under the government's new promotion package had dropped, arranging fees could increase. "Generally, we're trying to make it more worthwhile to stay with the bank rather than transfer elsewhere," Mr Chaiyanand said.
Siam City Bank, which extended four billion baht in new mortgage loans in the first quarter, expects lending activity to pick up in the second half thanks to the new tax incentives, and could look to revise upwards its full-year loan target of 12 billio baht. Siam Commercial Bank meanwhile has extended a zero-rate, six-month mortgage campaign by another month to help draw customers. Rungruang Sukkirdkijpiboon, an SCB executive vice-president, said the bank failed to meet loan targets in the first quarter, as buyers delayed purchase decisions in anticipation of the new stimulus programme. But SCB, the country's third-largest bank in assets and one of the largest home mortgage lenders, remains confident it will meet its retail loan target of 55 billion baht for the year.
Mr Rungruang noted that only 1 percent of the bank's total housing loan portfolio of 200 billion baht was transferred to competing banks in the first quarter. At Kasikornbank, new mortgage lending in the first quarter totalled six billion baht, up 25 percent year-on-year. "Loan growth for the first quarter was quite strong despite heavy competition," said Chatchai Payuhanaveechai, a KBank senior vice-president. The bank has a full-year housing loan target of 30 billion baht, up 30 percent from last year. "While competition from refinancing deals offered by smaller banks has increased, we were not that affected.
Out of 90,000 housing loan accounts, we only saw around 100 clients pulling out," Mr Chatchai added.