Kasikornbank reports big jump in land loans for investment

By The Nation

 

 

Kasikornbank has seen a sharp spike in land loans for investment in the previous two months to Bt15 billion from rising demand for investment.

 

 

The land loan for investment enables rich clients with assets worth over Bt50 million to request loans for investment in the bank's private banking by using land as collateral asset.

 

The bank's Private Banking Business Group Head Jirawat Supornpaibul said most of the bank customers are businessmen or large families who have lands located in cities.

 

He added that returns from investing in the bank's private banking is currently at 6-7 per cent campared to the land loan rate of 2-2.5 per cent.

 

"As the amount of land loan for investment had hit the bank's target, the bank has requested the Bank of Thailand to expand the loan's credit limit to Bt30 billion in the next two years," he said.

 

"There are lands worth up to Bt5 billion that are currently under consideration, while we expect to grant more loans to customers next year."

 

He believes that risks from requesting land loans is low because the bank can tolerate risks from granting loans and customers' investment.

 

Also, he said the bank grants loans up to only 70-80 per cent of collateral asset value, while rich customers would not allow the bank to seize their assets easily.

 

"Customers who requested for land loans foresaw opportunities to generate returns, so we expect to get more customers in the future," he said.

 

Source: https://www.nationthailand.com/business/30399454?utm_source=homepage&utm_medium=internal_referral

 

-- © Copyright The Nation Thailand 2020-12-12

 

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10 minutes ago, rooster59 said:

The land loan for investment enables rich clients with assets worth over Bt50 million to request loans for investment in the bank's private banking by using land as collateral asset.

 

Also, he said the bank grants loans up to only 70-80 per cent of collateral asset value, while rich customers would not allow the bank to seize their assets easily.

So, let me get this right, you borrow up to 80% of the value of your house, give it to the bank, who could lose it and then take your house ? Sounds a good deal for the bank to me !

8 hours ago, RichardColeman said:

So, let me get this right, you borrow up to 80% of the value of your house, give it to the bank, who could lose it and then take your house ? Sounds a good deal for the bank to me !

And then the bank puts it on their books at 3 x its tru value so cooking the books.

I’m guessing with news on the vaccine, perhaps rich people think the economic bottom is (close to) being reached. So good bargains on lands is possible now from people in financial troubles. Rich people could use these loans to increase property assets, perhaps sell again in a few years at a decent profit.

53 minutes ago, wolf81 said:

Rich people could use these loans to increase property assets, perhaps sell again in a few years at a decent profit.

 

Only, the rich don't need loans.

9 hours ago, Venom said:

 

Only, the rich don't need loans.

The extremely rich might not need loans, but debts are in most countries tax deductible and there might also be cash flow reasons.Very rich people might also use companies to buy property (again for tax reasons) and then using a loan might also make more sense perhaps.

 

People that are above average wealthy, but not extremely rich, might opt for loans in order to buy more property. Either use 100% to buy 1 property or buy 5 properties by paying cash 20% and making loans for the remaining 80%. 

10 hours ago, Venom said:

 

Only, the rich don't need loans.

 

You might be surprised how many outstanding loans the richest people in the world have

12 minutes ago, Susco said:

 

You might be surprised how many outstanding loans the richest people in the world have

 

You are correct. Of course depends on the interest rate. At only slightly above zero percent interest it really makes no sense to pay cash. 99.99% of the population don't have access to those low interest loans. I suspect many will be losing their homes in the not to distant future. 

Loaning of land, or loaning against land? Not sure, I'm confused.