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B25bn for Cheap First-Home Mortgages

By on May 06, 2011 in Residential

Bangkok Post Published on May 3, 2011

The cabinet on Tuesday approved a proposal that the Government Housing Bank (GHB) make available 25 billion baht for loans for first-time homebuyers.

The bank will offer first-time homebuyers a mortgage loan at zero interest for the first two years if it is less than three million baht, with a full term of 30 years. Homebuyers with less than one million baht annual income can borrow up to one million baht.

The projected is aim at helping low and medium income earners at a time when interests rates are rising and the cost of living increasing. The government will compensate the bank for the interest loss, at 450-500 million baht.

Borrowers will pay zero interest in the first two years, 0.5% in years 3 to 5, and 1% from year 6 onwards.

Homebuyers can submit loan applications from May 8 to Dec 31.

Deputy government spokesman Vachara Kannikar said the cabinet approved 25 billion baht, up from the bank’s previous proposal of 20 billion baht.

The scheme applies to people buying a stand-alone house, a townhouse or condominium. To prevent for any impact on other banks, the cabinet has banned existing homebuyers from refinancing existing loans through the scheme.

The government expected homebuyers’ loan applications to meet the 25 billion baht within two weeks. GHB expects the mortgage scheme will stimulate the real estate sector and encourage stable growth.

 The cabinet also approved additional measures to help entrepreneurs access loans from the Small and Medium Enterprises Development Bank. This is aimed at businesses affected by the political unrest who have yet to receive insurance payments.
They can seek loans up to 15 million baht before June 30, up from the 5 million baht loan offered up until Dec 31 last year.

The cabinet also approved a 5.5 million baht budget to compensate BTS, the operator of the elevated skytrain train, for losses during the political unrest last year. The Transport Ministry is required to negotiate a compensation settlement with BTS, which is seeking recompense for lost income.

The company reported that it lost 140 million baht when part of the skytrain service was shut down for 20 days in April-May last year. The cabinet approved a 212.65 million baht budget from a reserve emergencies fund to compensate government agencies for damages.

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