KBank introduces 50-year mortgages

“We expect customers will apply for the promotion, especially first-jobbers who can swing a Bt1-million home. The housing market in the first quarter showed that condominiums priced at Bt1 million to Bt2 million are the most popular,” Chatchai Payuhanaveechai, executive vice president, said yesterday.

The loan was designed as an option for customers wanting to buy a home sooner rather than later and helping those requiring a lower monthly instalment, he said.

The campaign will help ease the debt burden of customers facing the high cost of living, he said.

The bank wants to expand its customer base to first-jobbers making Bt16,000-Bt20,000 a month, since they yearn to own a home faster.

For a 30-year loan, customers looking at a Bt1-million home have to show a salary of Bt18,750, but for this campaign, they only need to earn Bt16,300, as instalments would run Bt6,800 per month for the first 30 years, rising to Bt2,600 for the remaining years. Customers would have to give up at least Bt7,500 a month for a 30-year loan.

The interest rate for the 50-year mortgage is the same as for a 30-year loan. If customers pay instalments for the maximum 50 years, that means the bank will receive more interest income.

The 50-year loan will become the new benchmark for housing loans, replacing the 30-year loan, Chatchai predicted.

Flood-zone and refinancing customers can also join the campaign. 

The campaign is the key driver of new home loans this year for KBank. It projects new loans of Bt40 billion and new mortgages of Bt50 billion to Bt55 billion this year.

Developers are building condominiums rather than detached houses because of the flood last year. Of the 24,631 new units registered for construction in the first quarter, 19,430 were condos, accounting for 75 per cent.

Residential prices this year are expected to edge up by 5-10 per cent to cover the climb in costs, Chatchai said.