Mortgages tipped to be more competitive
Competition in the mortgage market will grow more furious because smaller banks are beginning to focus on retail banking after finding that large corporations have more choices for fund mobilisation.
Chatchai Payuhanaveechai, secretary-general of the Housing Finance Association, said last week that the Bt2.2-trillion housing loan market has a good chance to expand from new players because about 80 per cent of small and medium-sized banks are eyeing housing loans.
The banks that used to focus on corporate banking are giving more importance to retail banking to diversify risks. In retail banking, mortgages are the priority because they can be used to cross-sell products.
Local banks in the near future will have retail loans as their main portfolio because corporate customers can raise funds by themselves through the equity market, he added.
Pikun Srimahun, executive vice president of Siam Commercial Bank, said the mortgage market should be moving in the same direction as the association predicted. SCB – as the mortgage market leader among commercial banks with outstanding loans of Bt340 billion – has to adjust its strategy to capture more customers.
The bank has dived into the low-income segment to expand its customer base and boost new home loans. The average price of homes in its portfolio has fallen to Bt1.8 million from Bt2 million, reflecting its emphasis on the mass market.
Low-income earners first need to know what their debt-repayment ability is, so SCB will act as a financial adviser as well as a lender. Financial counselling and quick service are the keys to winning the hearts of the low-income segment, she added.
SCB posted new housing loans of Bt70 billion in the first seven months. The bank believes new housing loans this year will reach Bt90 billion, beating the target of Bt80 billion.
Even Land and Houses Bank (LH Bank), which is a small bank, is diversifying its portfolio to consumer loans from project loans to its affiliated developers – Land and Houses and Quality Houses, said Chintana Klaisuwan, senior vice president.
L&H and Quality Houses represent 80 per cent of its housing loan portfolio. The bank plans to lend more to retail customers of other developers in order to balance the portfolio at 50:50.
"Our strategy includes expanding loans to condominium projects from horizontal projects," she said.
LH Bank projects outstanding mortgages of Bt29 billion this year, up from Bt27 billion last year.
