Cambodian banks issue almost $3.5bn in mortgages

Mortgage loans account for nearly half of total consumer credit

Outstanding mortgage loans in Cambodia’s financial institutions reached USD3.42 billion at the end of June, Realestate.com.kh reported, citing figures from Credit Bureau Cambodia (CBC).

Consumer credit in Cambodia hit USD7.16 billion last month, up 6.8 percent from the first quarter of 2019. Mortgages accounted for 47 percent of the total, while personal finance and credit cards comprised the rest.

Mortgage loans have increased by 30 percent from the same time last year—a “positive” for the industry, according to So Phonnary, executive vice president at Acleda Bank. “We are seeing more growth in the mortgage industry. But, at the same time, we are always careful about development and we mitigate risks by balancing loans across many sectors.”

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Acleda extended USD273 million worth of housing loans, home improvement loans, and real estate loans to 7,913 customers at the end of June.

“Before, when people had lower incomes, the biggest concern was having enough food to eat … Now people have higher incomes and they want to upgrade to a more comfortable lifestyle,” Nuon Rithy, chairman and CEO of Khmer Appraisal Foundation (KFA), told Realestate.com.kh.

CBC’s report, however, does not take into account mortgages issued by developers, which usually do not require downpayments as opposed to banks that offer more restrictive loan-to-value ratios. Such payment plans, which often take 25-year contracts, have grown increasingly popular in recent years, especially for boreys or landed homes.