Thailand government set to roll out phase two of low-cost housing scheme
The country is experiencing the lowest lending rates of the last 10 years, driving domestic property market growth
According to Bangkok Post, Thailand’s government is prepared to launch the second phase of the One Million Houses low-cost housing scheme valued at THB30-50 billion (USD960,922 – 1.6 million) with a fixed rate of two percent for 10 years to aid low-income homebuyers and revive the domestic real estate market.
Chatchai Sirilai, president of state-owned GH Bank, said the second phase proposal is scheduled for the bank’s board of directors to approve sometime in April.
The second phase offers a lower interest rate than the first phase and increases the price ceiling of housing units to THB1.2 million from one million.
The first phase provides an average interest rate of three percent a year for the first three to five years and has already accepted THB35 billion worth of mortgages. Around THB15 billion remains and could be transferred to the second phase, said Chatchai.
As stated by Chatchai, the bank’s housing loan approval for three years shows that housing demand from low- and middle-income earners is still strong, despite the pandemic and the Bank of Thailand’s strict regulations to curb loan extensions for second homes.
The bank approved THB210 billion worth of mortgages in 2018, THB217 billion in 2019, and THB255 billion in 2020.
From the beginning of this year to March 29, the bank has approved THB43 billion in housing loans, which is a healthy expansion from the same time last year, he added.
Chatchai said, “Such figures show that even with a crisis there is opportunity, especially for homebuyers that have real demand or even for investment purposes.”
More: Mumbai sees highest yearly decline in unsold housing stocks
He believes low-interest rates, reduced house prices, and the government’s property tax incentives are driving the robust growth.
“Over the last 10 years, I’ve never seen such low lending rates – below three percent for years now. It used to be 12-13 percent in the past,” he said. “But the low-interest rate structure also sounds much like a time bomb. Whether buyers can continue their instalment payments once rates pick up is a vital issue, forcing them to be cautious.”
GH Bank aims to provide new loans worth THB216 billion this year, a jump from last year’s THB210 billion target.
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