SMC assigns B9bn for mortgages

State-owned Secondary Mortgage Corporation (SMC) plans to earmark 9 billion baht to acquire mortgage portfolios this year, its head says.

SMC’s goal is to spend 4 billion baht to buy mortgages from property developers and the remaining 5 billion from financial institutions, said Wasukarn Visansawatdi, the SMC president.

An amended draft to allow SMC to acquire mortgages from property developers and non-bank financial institutions is expected to come into force by the middle of this year.

SMC is particularly keen to buy mortgages from the National Housing Authority (NHA), whose debtors all owe less than 1 million baht each, Mrs Wasukarn said. SMC’s mortgage debt averages 2 million baht per customer.

SMC has talked with the Thai Real Estate Association about letting property developers learn about its mortgage purchase criteria, including debt repayment track records.

The mortgage market amounts to about 500 billion baht, of which 90% is post-financing from financial institutions. Most mortgages from property developers are located in provincial areas or massmarket residential projects.

Some developers act as lenders to help their customers who cannot access funding from financial institutions, such as freelancers.

SMC’s loans outstanding amount to 20 billion baht. Townhouses dominate its loan portfolio at 90%, with condos making up the rest.

SMC has tightened its lending criteria because of concern for higher soured loans. It recently began applying a maximum debt-to-income ratio of 60% and now requires applicants to have at least one year of payment history. SMC set a goal for less than 0.5% of new mortgages to turn sour.

Mrs Wasukarn said SMC plans to offer mortgagebacked securities worth 4 billion this year to institutional investors through private placement.