CIMB Thai offers floating-rate mortgages to SENA
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CIMB Thai Bank is offering mortgages with a floating interest rate throughout the tenor of the loan to customers of SENA Development. The partners are touting the scheme as a way to resolve the problem of high mortgage rejection rates among low-income ear
Under the programme, those who buy property from SENA will qualify for loan terms that remain unchanged throughout period of the mortgage. Normally, banks offer mortgages with a fixed rate for the first three years before charging MLR minus a certain percentage.
CIMB Thai and SENA hope the programme will attract customers who want to be freed from their loan burdens quickly, said Papin Dhanasrivanichchai, senior vice president for secured loan products at the bank.
Kessara Thanyalakpark, executive director at SENA Development, said the company hopes this programme will see the mortgage-rejection rate for its customers fall below 10 per cent. It stands at 10-15 per cent currently.
She noted that buyers of homes from Sena tend to be mid- to low-income earners. Rising household debt has made financial houses more cautious about lending to this segment. However, for this programme, customers who demonstrate financial discipline stand a good chance of being approved for a loan from CIMB Thai, she said.
Under this programme, customers who take out a mortgage worth Bt1 million will have monthly debt payments of Bt6,700 for 245 months based on an MLR (minimum lending rate) of 7.625 per cent.
She explained that the floating interest rate provides the lowest rate available. In general banks will not offer a floating rate from day one because it would lower their interest income.
“We and SENA developed the programme to help customers of SENA to get loans easily. Disciplined customers should be freed form their debt within a short period,” Kessara said. The programme will be officially launched on October 1 and last until December 30.
CIMB Thai is focusing on financial discipline among borrowers and rejects borrowers who seek loans to buy fourth residences. This has pushed the rejection rate at CIMB Thai to 20 per cent.
CIMB Thai has revised its new-loan target for this year to Bt18 billion after achieving its initial target of Bt16 billion last month. Outstanding loans this year have a good chance of reaching Bt45 billion, up from the previous target of Bt40 billion.
