SCB raises 2012 growth projection for mortgages

The bank aims to secure Bt20 billion of the Bt50 billion worth of projects of major developers that will be transferred to home-buyers this quarter, Pikul Srimahunt, an executive vice president, said yesterday.

In the first nine months, the bank increased its home loans by 9 per cent or Bt95 billion, faster than the 6-per-cent pace of the market. Its outstanding mortgages stood at Bt370 billion. If it can achieve its fourth-quarter growth target, it will end the year with close to Bt400 billion, she said.

The key factor in the growth of mortgages is urbanisation, which has accelerated supply. The major developers are now launching projects in major provinces and moving towards smaller condo projects in a bid to provide homes for those with stable purchasing power.

The property market is not in an oversupply situation. Developers have experienced bubbles in the past, so they have ensured that their debt-to equity ratios are not over 2 per cent, unlike 17-18 per cent in 1997.

"We believe developers can find the balance point for their business, such as residential projects that are close to infrastructure as well as mass-transit lines," Pikul said. "The housing demand of the bank’s customers is more real than speculation."

SCB’s housing-loan portfolio is about 20-per-cent condos and 80-per-cent low-rises such as townhouses and detached homes.

Even though lending is growing, revenue might not improve much as the competition is intense, Pikul said. Mortgage lenders cannot enjoy wide margins even though several banks recently hiked interest rates to cover the higher cost of funds.

Mortgage interest rates at SCB were raised by 0.25 percentage point to 2.75-3 per cent for new homes.

The bank is attempting to derive more income from the "My Home My Cash" product, which has been strongly promoted this year to start-ups and businesses needing working capital. My Home My Cash loans are expected to jump to Bt20 billion this year from Bt2 billion last year.

My Home My Cash charges 10 per cent in interest for the first year and minimum retail rate plus 2 points from the second year to the end of the loan term.

My Home My Cash can help small and medium-sized enterprises that used to turn to loan sharks to enter the banking system. The businesses must have no mortgage liabilities before applying for up to Bt10 million. Instalments run as long as 30 years – the same as mortgages. The longer period helps ease the financial burden on borrowers, Pikul said.