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Thailand Property – Mortgage demand sluggish despite low interest rates

DEMAND FOR mortgages this year is likely to be lower than banks expect, as fewer borrowers require home loans, even at lower interest rates.  The slowdown for the country’s largest mortgage lenders in the first month reflects that consumers are delaying their decisions on buying a residence, making major developers suspend projects and shift to focus on their backlog, Chatchai Payuhanaveechai, an executive vice president at Kasikornbank, the third largest player among commercial banks, said yesterday. There are many factors pulling down demand, with the exception to this being the low interest rate, which can help maintain the segment, he said.

Housing loans in January have not recovered from November-December, when they plunged 10-15 per cent due to the postponement of house transfers and mortgage registrations by homebuyers, demonstrating concerns over the prolonged political uncertainty.  Developers have postponed residential projects and launches scheduled for this year pending some clarity over the impacts on the overall economy. Most developers have shifted to low-rise residential projects in the provinces, where the market has been less ruffled by the political unrest.

Siam Commercial Bank (SCB), the biggest housing lender, is considering revising down its housing loan target this year because of the protracted political shambles, said Pikun Srimahunt, a first executive vice president.

Thaweelarp Rittapirom, an executive vice president with Bangkok Bank, said the political crisis has taken a toll on housing buyers and mortgage loans. The bank expects that sentiment could drag on to next quarter before improving in the second half.  “A home loan is a long-term loan. Buyers have taken a long time in making decisions, and with the current political situation, buyers have to wait and see because we have never seen this situation before,” he said.

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Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

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