CIMB Thai Bank aims to get jump on rivals with lending for used residences
CIMB Thai Bank believes it has spotted a neglected corner of the market for loans to buyers of used homes.
Onanong Udomkantong, executive vice president and head of retail loan products at CIMBT, said relatively few financial institutions were active in this sector of the mortgage market.
With the proliferation of housing-project launches over the past five years, Onanong said used homes had not attracted much attention from lenders. But given that older housing stock was more affordable than new properties, ordinary homebuyers were increasingly drawn to second-hand properties, she said.
This is backed up by reports to the bank from real-estate agents, who say transactions in the secondary market are increasing.
CIMBT expects to see growth in the used-home market of about 10-20 per cent this year, against 5-per-cent growth in the new-home segment.
The bank said many of its rivals had not moved into the used-home segment and that it would seek to boost demand with attractive loan pricing.
Similar rates
Interest rates for loans for used homes would be similar to those for new-home loans. The bank has an effective rate of 3.33 per cent for the first three years for new both new and second-hand homes.
CIMBT will use online channels and work with real-estate agents to lure customers in this segment. It hopes that such loans will reach about 10 per cent of its total new-mortgage target of Bt15 billion this year.
The bank’s outstanding home loans for this year would reach Bt70 billion, from Bt65 billion last year, if the bank can achieve the new-loan target of Bt15 billion.
Onanong said the bank would launch a so-called home-for-cash product next month to cater for ordinary workers who want to tap into the value of their properties.
A study by the bank indicates that many ordinary salaried workers are looking for opportunities to open small businesses, such as cafes. The bank can design a home-for-cash product for those wanting to use their home as collateral for a loan to support such a business.
Onanong said she expected rejection rates in the housing-loan market would remain high this year. Several banks, including CIMBT, have shifted their sights to the mid-to-high-end segment.
That housing segment is defined as a property worth at least Bt5 million.
Onanong said that the mid-to-high segment for CIMBT was also taken to mean homebuyers with monthly incomes of at least Bt30,000.
This segment has an approval rate of 70-80 per cent compared with 50 per cent for loan applicants wanting to buy properties Bt3 million, she said.
