Banks slash interest rates to woo refinance customers
Watchanond, 35, a borrower has got offers from commercial bank to refinance his mortgage at special interest rates that are lower than what was offered by his current bank five years ago.
"I am considering refinancing if I get a lower interest rate than what my existing bank offers me," Watchanond said.
With household debt rising, mortgage rejection rate recorded an average 30 per cent for new loan applications, forcing commercial banks to propose refinancing packages for their customers who have a consistently good record in terms of paying their monthly instalments with others banks.
CIMB Thai Bank is one of the commercial banks to have launched special refinancing interest rates. Customers who refinance their mortgage for the first three years will pay 4.67 per cent of the loan interest rate of 6 to 7 per cent a year.
CIMB Thai executive vice president and head of retail loan products, Onanong Udomkantong, said that the programme "Balance Transfer Refinance" is aimed at those who have mortgages with other banks for more than three years. The company’s mortgage campaign is worth Bt2 billion.
Land and Houses Bank president Sasitorn Pongsathorn said only 20 per cent of LH Bank’s new mortgages are granted to buyers of housing projects pre-financed by the bank. Those buyers are pre-approved by the bank, so it knows their background. But once home-buyers’ fixed repayment period matures, many shop around for lower interest rates, and LH Bank will try to tap them.
Tisco Bank is another small institution that believes refinancing as a niche marketing strategy is a good way for the bank to avoid the intense competition in the mass market. The bank is joining forces with the Secondary Mortgage Corporation to serve customers who want to reduce their financial burden for the long term, said Yuttpong Sriwongjanya, Tisco’s assistant executive vice president and head of retail banking.
