GH Bank mulls even cheaper loans

The state-owned GH Bank is poised to launch the country’s lowest mortgage rate of below 3% for three years, a move in line with the government’s policy to help people own their own home.

The rate for the new housing loans would be 0.75 percentage points lower than the current mortgage package of 3.4% for the first three years, said president Chatchai Sirilai. The rate will be determined by the bank’s board.

The board will discuss the new lending package on May 18.

The bank is set to provide 10 billion baht in loans for the new mortgage scheme.

Those with monthly gross income of up to 45,000 baht per household or monthly net income of 25,000 baht per family are the target of the scheme.

The bank will cap loans at 2 million baht per borrower under the scheme, available to those buying a first home as well as those already owning a home.

The lower mortgage interest rates will not cause GH Bank to plunge into a net loss, but its interest margin will be narrowed, Mr Chatchai said.

He recently said GH Bank could cut its interest margin to 0.5%, which would be the lowest it could offer without incurring a loss, to give more than 10 million lowincome earners access to a mortgage.

At present, GH Bank’s housing loan products offer a low interest margin of 1%.

Borrowers who secure housing loans worth up to 1.5 million baht account for 80% of the bank’s debtors.

GH Bank aims for 178 billion baht worth of loans this year, up from 168 billion lent last year. The bank already lent 28 billion baht in mortgages during the JanuaryMarch quarter.

In related news, GH Bank joined hands with Social Development and Human Security Ministry to launch the Home for All mobile app, which will allow the government to learn about housing demand for 2.4 million people it is targeting who do not own their own home.

As an incentive for the target buyers to provide details on the app, the bank could offer special mortgages for when they purchase their own residence.