Increasing demand for home-for-cash bank products
Play
BANKS HAVE seen rising demand for home-for-cash products among small business owners who have freehold residences due to cash-flow benefits and the lower interest rate.
Pikul Srimahunt, the head of mortgage and small enterprise products at Siam Commercial Bank, said that many customers – especially business owners – asked for loans through SCB’s “My Home My Cash” product.
Pikul said that customers were drawn to the product’s lower interest rate compared to a personal loan.
She said that loans through My Home My Cash had risen by 20 per cent.
The bank expected the trend of business operators who have freehold residences as collateral to get loans will further increase because the economic situation continues to affect their businesses.
“These customers want quick loans to solve their liquidity shortage but they quickly repay the debt as well,” Pikul said. “Therefore, the loan portfolio of My Home My Cash might be unchanged from last year at Bt15 billion.” In general, she said that the bank would offer a maximum loan in the amount that was 50 per cent of the property’s appraisal value.
However, it can extend the loan to 80 per cent of the appraisal value on a case by case basis, she said.
Nathapol Luepromchai, senior vice president of Bank of Ayudhya, said that the bank would start promoting its home for cash product to the public next year because the bank wanted to focus on new housing loans to build its loan portfolio this year.
“Yet, we have promoted home for cash at branches to build product awareness among Krungsri customers,” Nathapol said.
“Loans from home for cash have grown by 10 per cent year on year. Home for cash consumers have been seen both salary-men and business owners.”
He said that at the beginning, the bank would focus on existing customers who have freehold residences and after promoting the product to the public, it expected customers from other banks would be interested in Krungsri’s product because the rate was more attractive.
That rate is 6.85 per cent per annum.
Pikul said that there was still demand for homes overall but many people did not have the purchasing power to get loans.
SCB recommends that these customers seek co-borrowers or smaller residences so they have a better chance of getting a loan.
Pikul added that the lower purchasing power of some consumers was impacting on new residential projects launched this year, reflected by slow sales at some projects while some developers were offering extra promotions to lure customers.
Nathapol said that it was a golden time for people who have enough money to get value deals from property developers.
People who have confidence in the economy and have enough money should grab this opportunity and make a profit when the economic recovers, he added.
