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UOB targets high approval rate for home loans

Feb 28. 2016
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UNITED OVERSEAS Bank (Thai) is confident that it can maintain high approval rate for home loans and achieve 10-per-cent growth in new housing lending this year.
The bank will consider the liquidity of each asset and, if such assets are in prime locations, applicants stand the best chance of receiving a mortgage, said Yuttachai Teyarachakul, head of personal financial services, United Overseas Bank (Thai).
In general, banks will grant a loan of 90 per cent of a home’s appraised value to customers buying used housing, but UOB is prepared to offer 100 per cent of the value if it sees potential liquidity in an asset in the event that a borrower might need to sell the home in the future, he said.
“Selective location is our strategy. We are not giving loans in all provinces, but we will consider the liquidity of assets through our scoring system,” he added.
The bank does not, therefore, have the problem of a high rejection rate among mortgage applicants despite the ongoing economic uncertainty, and its approval rate is expected to stay in a range of 70-80 per cent, Yuttachai explained.
UOB has partnered with residential developers that have projects in prime-liquidity zones and its direct-sales staff at those projects are trained as mortgage specialists, making the process of advancing a home loan to customers a quick one.
All parts of the capital, through to outer Bangkok, are regarded as prime liquidity areas for the bank.
Direct sales at residential projects contribute 60 per cent of its housing loan applications, with the remainder coming through UOB branches, he said.
Moreover, the bank has a specific focus on housing priced between Bt3 million and Bt5 million, because buyers in that range tend to know their debt service and repayment ability well, he added.
Non-performing housing loans at UOB stand at 1.9 per cent, compared to the industry average of 2.42 per cent, because the bank concentrates on salaried individuals rather than the self-employed segment, with the former accounting for 70 per cent of its mortgages.
The bank’s target for new home-loan growth is 10 per cent this year, boosted by the fact that several residential developers have said that housing prices could expand by 3-5 per cent over the course of the year, Yuttachai said.
UOB’s outstanding housing loans stood at Bt120 billion at the end of last year.

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