Housing loans likely to declineby 10-20%

The Housing Finance Association expects new housing loans to decline by 10-20%, from last year, said president Kitti Patanapongpibul. He said major factors would be a decrease in home purchasing and credit lines. At the same time, homebuyers were buying more low-priced, smaller-sized units.

Total outstanding loans released by commercial banks, excluding the Government Housing Bank, were 250 billion baht as of the end of May, down by 4% from the end of 2007.

Non-performing assets (NPAs) held by commercial banks, excluding the state-owned GH Bank and asset management firms, declined to 150 billion baht as of the end of May compared to 160 billion baht at the end of 2007.

''The capital and profits of banks were high enough for them to offer discount prices for NPAs. But although NPAs were not a problem, their NPAs [at 4% of total outstanding loans] were high compared to other countries where they were only 2%,'' Mr Kitti said. The association plans to hold its next NPA Grand Sale from July 11-13 at the Bangkok Convention Center, Central Plaza Lat Phrao.

It targets sales of 2.5 billion baht from around 2,500 properties, up from two billion baht generated from the fair last year.

''Tax incentives and lower purchasing power of homebuyers could boost sales of NPAs when inflation and construction costs are high,'' Mr Kitti said, since NPA prices are lower than for new units in the same locations.

The fair will feature more than 10,000 NPAs and second-hand properties worth more than 36 billion baht offered by 12 financial institutions, two asset management firms, 27 property firms and three brokers.

Exhibitors at the fair will have offers that include discounted prices of up to 70%, zero-interest financing for up to one year, higher credit lines and a waiver or discount for transfer, mortgage and other fees.

Bangkok Post : 04 July,2008