GH Bank to participate in Pracha Rath
The Government Housing Bank (GH Bank) plans to offer a five-to-six-year fixed mortgage, including a waiver of the transfer fee, to buyers under the Pracha Rath housing project.
The project is expected to kick off next month if it is submitted to a Cabinet meeting this month.
GH Bank will propose the special loan package to the Finance Ministry for consideration, Surachai Danaitangtrakul, chairman of GH Bank, said yesterday.
As a specialised financial institution (SFI) of the government, GH Bank will support the project with pre-financing – project loans to the developers – and post-financing – home loans to the low-income earners.
The bank will finance 100 per cent of the residential price of Bt700,000-Bt900,000.
It has set an annual target of Bt10 billion in Pracha Rath loans for three years.
It will propose the eligibility criteria for borrowers and terms and conditions for the loans to the Finance Ministry. Borrowers should show a monthly income of Bt15,000 and must be first-time buyers.
Residential projects must be the non-performing assets of SFIs, finished projects of private developers or new projects developed on the land of a private company or the Treasury Department.
The interest rate should be lower than the existing programme and the fixed rate should be extended to at least five to six years from two years.
Based on a home price of Bt700,000, for example, the borrower should be able to afford the monthly instalment of nearly Bt3,000 for the first two years against Bt4,100 in the general programme.
"We will waive the fee for transfers for three years for the borrowers, which will cost Bt270 million, regarded as small money. The Finance Ministry will subsidise the cost to GH Bank," he said.
The bank will open registration for developers and customers in two weeks after Cabinet approval.
Then they will be screened to see if they qualify. Around 10,000 units are qualified for Pracha Rath housing, of which 2,500 are the non-performing assets of SFIs and the rest are from the projects of developers including LPN Development and Nirand City.
The bank will check the home prices of the existing residential projects of private developers.
"If a unit used to go for Bt690,000 and the developer upped the price to Bt700,000, it will not be allowed to join the project," he said. Laiwan Pongsangium, acting president of GH Bank, said part of the bank’s new loan target of Bt160 billion this year would come from the Pracha Rath and some other special programmes for poor customers, following the Finance Ministry’s policy.
Housing loans at GH Bank will now be Bt1.5 million to Bt2.5 million per account, but the number of accounts will surge.
The bank last year acquired 124,000 customers, generating new loans of Bt157.44 billion, beating the target of Bt149.80 billion.
New loans grew by 10.3 per cent last year, driving total outstanding loans higher by 8.6 per cent to Bt862.83 billion.
Its non-performing-loan ratio stood at 5.4 per cent.
Its net profit increased slightly by 1.3 per cent to Bt8.7 billion.
Under GH Bank’s soft-loan scheme, which ends next month, as of Wednesday, the bank had approved loans of Bt17.39 billion to 12,449 borrowers from loan applications for Bt24.86 billion.
The bank expects to have approved Bt25 billion in loans by this month.
The Bt25 billion in loans is part of the government’s stimulus package to help low-income earners access mortgages.
People with a monthly salary of Bt30,000 can borrow up to Bt3 million.
Those interested have one year to submit their applications and get an interest rate of 3.5 per cent for the first year and 4.25 per cent for the second year.
For the following years, the rate becomes fixed at the minimum retail rate minus 0.75 percentage point.
The maximum loan term is 30 years.
