Stage set for banks to revive zero-interest mortgage deals
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SEVERAL BANKS are expected to resume pricing strategies, including zero-interest mortgage campaigns, in May after the government’s stimulus scheme for housing purchases ends on April 28, according to Kasikornbank.
The government incentives on housing transfer fees started last October. Some developers have added their own incentives to lure buyers, said Boonchan Kulvatunyou, first senior vice president of KBank.
Banks that have participated in the Money Expos have highlighted mortgages as key products, but they have avoided zero interest rates for several years after the central bank asked them to tone down such campaigns.
However, the Money Expo in May will see the return of such promotions, and some campaigns will be subsidised by residential developers, or launched in cooperation between banks and developers, Boonchan said.
KBank is considering a zero-interest campaign but it should tap the right customer segment, buyers who will not become bad debtors in the future, he said.
The bank this year targets new loans of Bt50 billion, higher than last year’s Bt48 billion. To achieve that target, it must structure financial solutions and develop campaigns in line with the risk of each segment.
Based on the new-loan target of Bt50 billion, outstanding loans this year will increase to Bt250 billion from Bt235 billion last year.
Upper-income customers who buy homes from top developers will be offered a fixed rate of 3.8-3.9 per cent for the first three years. General customers who buy from run-of-the-mill developers will be offered interest rate of around 4-4.5 per cent for the first three years.
Customers who buy from top property developers are regarded as quality clients, so people in this segment have a high chance of getting their mortgages approved, Boonchan said. Their approval rate is 75-80 per cent, compared with 55-60 per cent for customers who purchase from lower-echelon developers.
The bank has been wooing the mid-to-high-end customer segment in Bangkok with its “K-Home Loan Festival” campaign, aimed at re-energising the loan market in metropolitan areas. The campaign includes a special 0.99-per cent interest rate for the first six months of a mortgage and the chance to win a Toyota Fortuner for customers who borrow more than Bt1 million.
The Fortuner is a favourite among customers in metropolitan areas, he said, adding that flexible monthly instalments are another highlight to be offered to customers this year.
KBank is open to people with monthly incomes of Bt15,000 applying for its home loans, but most applicants are people earning twice that much. The average price of the homes it finances is Bt2.5 million.
