Banks cautioned over property loans

[webfact]

Banks  cautioned  over property loans

By The Nation

 

FILE photo

 

BOT governor calls for prudence amid glut in condo segment, riding NPLs  

 

Commercial banks are taking a cautious approach on loan extension to real estate developers and retail customers following a signal of concerns from the Bank of Thailand (BOT).

 

Recently, BOT governor Veerathai Santiprabhob expressed unease over the property sector, advising financial institutions to exercise prudence in lending to sector.

 

The central bank’s concerns came after witnessing a continuous rise in the sector’s non-performing loans (NPLs), due partly to financial institutions’ high loan-to- value ratio (LTV), and the prolonged interest rate situation which could lead to moves for higher yield.

 

Decha Tulanan, executive chairman of Bangkok Bank, said the bank has been careful on loan extension, while slowing down its lending to property developers and retail customers due to signs of oversupply in the condominium segment, as evident in lower sales and more promotional packages.

 

“Many condominium developers have faced difficulties in selling their projects,” he said.

 

The bank is now paying more attention on the location of the development, particularly condominium projects situated along the routes of the elevated rapid transit system or BTS, when considering a loan request.

 

Other factors include the liquidity and investments of the loan applicant as to whether it meets the bank’s requirements. 

 

Decha said the bank is mindful of its loan- to- value ratio (LTV) as required by the central bank.

 

“The rise in NPLs in the property sector did not occur on the side of developers and retail customers. We have instructed our staff to be cautious on the matter as demand for condominium units mainly came from speculators,” Decha said.

 

Alongkot Boonmasuk, senior vice president for Housing Loan Alliance and Promotion Management Department of Kasikornbank (KBank), said the central bank had sent a strong signal to commercial banks and the bank has been cautious in its lending to the sector.

 

The bank focuses on the capability of the borrower, income and debt as well as the loan limit under the LTV requirements, he said

KBank’s average approval rate of property loan requests stands at 60 per cent of all applications. Current demand is real demand from home-buyers as borrowers understand the anticipated interestrate uptrend would lead to higher expenses, he said.

 

 “We believe the current loan requests come from genuine home-buyers, trying to lock in the low interest rate now, Alongkot said.

Speculators may face heavier burden and higher risks, he said, adding that KBank has approved most loan applications from buyers of residential units developed by reliable property companies.

 

The bank’s property loan approval rate has increased to 75 per cent of total requests from an average of 60 per cent.

 

This year, KBank will keep the level of its NPLs in the property sector at no more than 4 per cent. It has also set a target of Bt45 billion in new loans.

 

Source: http://www.nationmultimedia.com/detail/business/30354062

 

-- © Copyright The Nation 2018-09-10

[ezzra]

24 minutes ago, webfact said:

BOT governor calls for prudence amid glut in condo segment, riding NPLs  

Not sure on what planet the BOT governor lives on but should he take a short drive down middle Sukhumvit sois  from 49 to 63 and above, he will dozens of high end condominiums are being built as he speaks, dozens high rise expensive units...

[RichardColeman]

1 hour ago, webfact said:

This year, KBank will keep the level of its NPLs in the property sector at no more than 4 per cent.

Considering all my Thai neighbours have new cars, are buying their houses, have all the new gadgets and phones, motorbikes coming out of their ***es, I think that 4% is going to be sadly way of target without serious fiddling. I know I have more income than them, yet I am living relativey a pauper next to their never never lifestyle

[Esso49]

Looks like the realisation of what is about to happen to Thailand's  artificially created economic bubble has finally started to be understood after 4 years of warnings.  

[RotMahKid]

1 hour ago, ezzra said:

Not sure on what planet the BOT governor lives on but should he take a short drive down middle Sukhumvit sois  from 49 to 63 and above, he will dozens of high end condominiums are being built as he speaks, dozens high rise expensive units...

Just saying that what they are building is no guarantee that they can sell it.

[worgeordie]

Getting a feeling of Dejavu, was here in 97,oversupply of property, 

especially Condos, and the same thing is happening today,they

never learn.

Women where buying up to 10 condos in new projects,paying

only a deposit,hoping to sell at a profit before they had to pay

for the Condos or lose their deposits,creating an unstable market,

 

regards worgeordie

[vukovar77]

So,maybe it is time to wait to buy some cheap units from banks which will be seized from developers?

[BritManToo]

Two shophouses near me been repossessed by KBank in the last couple of weeks.

Both with 90+% loans within 2 years of being built, quite a lot more never sold.

KBank is in trouble.

[BritManToo]

1 hour ago, RichardColeman said:

Considering all my Thai neighbours have new cars, are buying their houses, have all the new gadgets and phones, motorbikes coming out of their ***es, I think that 4% is going to be sadly way of target without serious fiddling. I know I have more income than them, yet I am living relativey a pauper next to their never never lifestyle

Same with my neighbours, houses on 90%, cars on least deposit longest repayment, and their kids all attend the most expensive private schools. (my kids go to the local government schools, and still end up bilingual and top of everything)

Edited September 10, 2018 by BritManToo

[CharlieH]

Some people finance things to the hilt not because they couldn't buy it but so that if they did hit money/debt issue they cant be taken away (by others) as they are "on finance" and not an owned asset.

 

 

[Esso49]

1 hour ago, vukovar77 said:

So,maybe it is time to wait to buy some cheap units from banks which will be seized from developers?

Be foolish to do so as they may appear cheap now but when the bubble really pops what you think is cheap now will cost you dearly. As an example a business colleague thought he bought a bargain in 1997 .    I advised him against it although after seeing the property I could understand why he thought it was a good deal.   Around 450 sq Meters in Ratchpasidek for less then 4.5 million in an auction completely fitted out.  Even 11 years ago that condo pre '97 would have sold for 15 - 20 million.  Boy,  it was like a James Bond apartment.   Anyway he ended up selling it in 2007 for less then he paid for it .  Why you ask ?

 

 

Simple case was it was in a block of other mostly unsold condos and when the market crashed so did the developer and the management company.  Let you guess what happened when the roof developed cracks and rains start pouring in over a period of 9 years.  So be warned.

[watcharacters]

1 hour ago, CharlieH said:

Some people finance things to the hilt not because they couldn't buy it but so that if they did hit money/debt issue they cant be taken away (by others) as they are "on finance" and not an owned asset.

 

 

 

I know from two dealings that  Thailand does have what was  called a "black book" regarding delinquent  payers.

 

I don't know if Thai people care about  that.       In my country if a person is pegged  as having a bad credit rating,  it makes any loans or credit card payments more dear.     It basically mucks up a persons credit for 7 or ten years.

 

Do you figure these people  who  "finance things to the hilt" don't care about the Thailand "black book"?

 

I suppose morals and doing the right thing don't enter into the equation.

 

 

[BritManToo]

5 minutes ago, watcharacters said:

 It basically mucks up a persons credit for 7 or ten years.

Rules changed, it's 5 years then gone.

[watcharacters]

19 minutes ago, BritManToo said:

Rules changed, it's 5 years then gone.

 

 

Changed where?

 

Got a link to your 5 year claim?

 

 

 

 

 

[CharlieH]

40 minutes ago, watcharacters said:

 

I know from two dealings that  Thailand does have what was  called a "black book" regarding delinquent  payers.

 

I don't know if Thai people care about  that.       In my country if a person is pegged  as having a bad credit rating,  it makes any loans or credit card payments more dear.     It basically mucks up a persons credit for 7 or ten years.

 

Do you figure these people  who  "finance things to the hilt" don't care about the Thailand "black book"?

 

I suppose morals and doing the right thing don't enter into the equation.

 

 

Its not about "black books" unless you do default but there are ways around that too.

 

Sometimes it just makes financial sense. As the saying goes "never use your money when you can use someone elses" 

Example: If a new car is 0% why spend your (capital) money, leave it gaining interest elsewhere if the monthly figure is no problem for you.

 

Others use finance as a kind of insurance. If something does go wrong with a ( loan) debt they cant take the car as its not your asset and you dont lose face etc to the people around you. Just an example of how some operate. Its all about appearance of wealth not actual wealth.

[marko kok prong]

Fiscal prudence and Thai people do not mix well.

[watcharacters]

6 minutes ago, CharlieH said:

Its not about "black books" unless you do default but there are ways around that too.

 

Sometimes it just makes financial sense. As the saying goes "never use your money when you can use someone elses" 

Example: If a new car is 0% why spend your (capital) money, leave it gaining interest elsewhere if the monthly figure is no problem for you.

 

Others use finance as a kind of insurance. If something does go wrong with a ( loan) debt they cant take the car as its not your asset and you dont loose face etc to the people around you. Just an example of how some operate. Its all about appearance of wealth not actual wealth.

 

 A "black book"  was  mentioned  to me when I bought a motorbike and when i wanted to cancel a mobile internet  contract not in my name but on my device.  That was a strange experience.

 

Are you familiar with the "black book" in Thailand?    It doesn't sound  like the Thai system  is  very   sophisticated.

 

Can you offer some information as to how the Thai system works?  It may be valuable information for TVF  members.

 

TIA.

 

[BritManToo]

32 minutes ago, watcharacters said:

Changed where?

Got a link to your 5 year claim?

1

In the Thai legal system, prior to 2013 a court ruling for unpaid debt blacklisted you from owning land, bank accounts, loads, vehicles for 10 years.

Then they reduced the blacklist to 5 years (sometime 2013 -2015).

I was living with a Thai lady that had been blacklisted for 10 years, then bought a house with a loan the month after the blacklist expired. The Thai court system holds & distributes the list, probably also recorded on their ID card record at the Amphur office.

She used to get a letter every year telling her she owed money, after year 10 no more letters.

Sorry, no links, just personal experience. My Thai reading/writing isn't good enough to do a google search on that Thai law.

Edited September 10, 2018 by BritManToo

[mogandave]

I don’t see much “fiscal prudence” in the West, certainly not in the US.

[watcharacters]

30 minutes ago, BritManToo said:

In the Thai legal system, prior to 2013 a court ruling for unpaid debt blacklisted you from owning land, bank accounts, loads, vehicles for 10 years.

Then they reduced the blacklist to 5 years (sometime 2013 -2015).

I was living with a Thai lady that had been blacklisted for 10 years, then bought a house with a loan the month after the blacklist expired. The Thai court system holds & distributes the list, probably also recorded on their ID card record at the Amphur office.

She used to get a letter every year telling her she owed money, after year 10 no more letters.

Sorry, no links, just personal experience. My Thai reading/writing isn't good enough to do a google search on that Thai law.

 

 

Good enough.   The change you refer to is the Thai system.      What i wrote is 

 

 "In my country if a person is pegged  as having a bad credit rating,  it makes any loans or credit card payments more dear.     It basically mucks up a persons credit for 7 or ten years."

 

My point is mucking up one's credit has a long term impact.     I understand "long term" isn't translatable into the Thai language.

 

Thanks for responding.

 

[simoh1490]

4 hours ago, Esso49 said:

Looks like the realisation of what is about to happen to Thailand's  artificially created economic bubble has finally started to be understood after 4 years of warnings.  

What artificial bubble is that then, do you have some details?

[Cake Monster]

8 hours ago, worgeordie said:

Getting a feeling of Dejavu, was here in 97,oversupply of property, 

especially Condos, and the same thing is happening today,they

never learn.

Women where buying up to 10 condos in new projects,paying

only a deposit,hoping to sell at a profit before they had to pay

for the Condos or lose their deposits,creating an unstable market,

 

regards worgeordie

Also their appears to be an large inflation in the asking price of land for sale, where the land in worth nothing near the asking price, or the buying price.

Land bought for the quick buck, and now the purchasers have to not only get their money back on the purchase, but also have to pay the Banks back on the loans taken out

this also happened in 97

[connda]

11 hours ago, RichardColeman said:

Considering all my Thai neighbours have new cars, are buying their houses, have all the new gadgets and phones, motorbikes coming out of their ***es, I think that 4% is going to be sadly way of target without serious fiddling. I know I have more income than them, yet I am living relativey a pauper next to their never never lifestyle

That's because they are all overextended and in debt up to their eyeballs, and by association, the banks who loan overextended clients money that they can't pay back will become just as overextended.  Then they'll cry to the government and IMF: "We never saw it coming!"  <sound of crashing / pan to a skyline of half-built condos> 

? No one remembers 1997?  How about 2008?  Nope?  Well, "eat drink and be merry" they say...

[CGW]

10 hours ago, worgeordie said:

Getting a feeling of Dejavu, was here in 97,oversupply of property, 

especially Condos, and the same thing is happening today,they

never learn.

Women where buying up to 10 condos in new projects,paying

only a deposit,hoping to sell at a profit before they had to pay

for the Condos or lose their deposits,creating an unstable market,

I was here in 97, the situation now is a lot different, the baht was tied at 25 to the USD and was far too strong, it was floated in 98, & reached realist levels thereafter. The banks and government have a lot of cash, this is not a poor country by any means! 

[worgeordie]

4 hours ago, CGW said:

I was here in 97, the situation now is a lot different, the baht was tied at 25 to the USD and was far too strong, it was floated in 98, & reached realist levels thereafter. The banks and government have a lot of cash, this is not a poor country by any means! 

The post is about property loans,and the glut of condos,another bubble ?

regards worgeordie

[simoh1490]

4 hours ago, connda said:

That's because they are all overextended and in debt up to their eyeballs, and by association, the banks who loan overextended clients money that they can't pay back will become just as overextended.  Then they'll cry to the government and IMF: "We never saw it coming!"  <sound of crashing / pan to a skyline of half-built condos> 

? No one remembers 1997?  How about 2008?  Nope?  Well, "eat drink and be merry" they say...

You are aware what the level of NPL's is, aren't you!

 

For others, Thai banks non-performing loans ratio is at 2.7%, very near the record low of 2.2%.

Edited September 10, 2018 by simoh1490

[CLW]

Also their appears to be an large inflation in the asking price of land for sale, where the land in worth nothing near the asking price, or the buying price.
Land bought for the quick buck, and now the purchasers have to not only get their money back on the purchase, but also have to pay the Banks back on the loans taken out
this also happened in 97

Speculation that went wrong. Some bought land on loan in the hope to re-sell it at a higher price in the future. Didn't find any buyers, loans must be paid back, land prices rise.

[CLW]

I was here in 97, the situation now is a lot different, the baht was tied at 25 to the USD and was far too strong, it was floated in 98, & reached realist levels thereafter. The banks and government have a lot of cash, this is not a poor country by any means! 

Different situation now, the banks and government might be safe.
I'm afraid of the current fake economy that is based on personal loans and not real income or individual cash savings.

[AtoZ]

22 hours ago, connda said:

? No one remembers 1997?  How about 2008?  Nope?  Well, "eat drink and be merry" they say...

I was single digit age at 1997, but I do remember 2008

 

Economic crisis is an opportunity for those who are ready. The tricky part is it's impossible to time precisely. 

[Esso49]

On 9/10/2018 at 11:54 AM, simoh1490 said:

What artificial bubble is that then, do you have some details?

Only a naive, a very stupid person  or those unable to face reality would be unaware of what I mean.