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SCB expects two new products will boost its home loan business

Jan 29. 2012
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The launch of two attractive products by Siam Commercial Bank - a maximum mortgage loan of 100 per cent without any down payment, and home insurance with flood coverage - makes the bank believe it can rapidly grow its housing loan business at the beginnin

Pikun Srimahunt, executive vice president, said last week that the bank’s mortgage business was up by 10 per cent year on year this month. Most of the new loans were for condominiums.

Earlier, the bank estimated its mortgage portfolio in 2012 would not expand much because the flood dampened the sentiment of buyers and consumers are not confident about projects in flood-prone zones.

Despite the recent flooding, the bank has retained its policy to lend up to 100 per cent of appraised value for residences both in flood and non-flood areas.

SCB offers a wide range of |financial services, including a |home insurance policy covering natural disasters, especially |floods. That is an advantage to secure new customers and retain

 existing customers. The bank, in cooperation with Deves Insurance, is selling the policy to protect its housing-loan customers.

The premium for homes in flood areas is Bt9,000 per home priced at Bt1 million, and Bt6,500 for homes in non-flood areas.

The premium has gone up 500 per cent from Bt1,500, the coverage is limited to Bt100,000 and now there is a 10-per-cent deductible, but customers are willing to pay to ensure their assets will be protected.

The full range of services has convinced customers, so the bank thinks it can achieve its target of Bt80 billion in new mortgages this year, Pikun said. The amount is down from Bt92 billion last year because of the floods. Outstanding loans at year-end could rise to Bt370 billion from Bt330 billion last year.

Condos this year could surge to 30 per cent of the bank’s total home loans from 10 per cent last year after customers shifted to buying condo units instead of single family homes or townhouses.

About Bt8 billion of condo loans were booked and if housing loans in the provinces are included, loans increased by 10 per cent year on year.

“The move reflects the buying mood of customers in December and January. We found at least 10 per cent of home-buyers cancelled their reservations and most mortgages in Bangkok are for condos rather than units in housing projects,” she added.

The bank this year would focus on the “My Home My Cash” product to serve the demand of customers who |want money to repair their residence.

“My Car My Cash” loans this year could jump to Bt20 billion from Bt5 billion last year.

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