Interest Rates To Boost Housing Loan Growth

[george]

Rising oil prices and interest rates to boost housing loan growth

BANGKOK: -- Rising fuel prices and upward interest trend will contribute to the expansion of housing loans extended by commercial banks since they make consumers rush to decide to buy houses, according a veteran banker.

Chatichai Payuhanaveechai, Senior Vice President of Kasikornbank Plc, said the oil price rise and the upward interest trend would lift costs of construction materials in the third quarter of this year.

It could contribute to the housing loan growth because consumers would decide to purchase houses more quickly for fear that higher prices of building materials would put more burdens in the future.

Under the circumstance, he said, the housing loans for this year are forecast to grow by 100 billion baht or 10% from 1 trillion baht at the end of last year and by 40% from the first quarter of last year.

“Now, consumers want to buy houses because they fear rising oil prices will lift prices of building materials, which lead to higher prices of houses. Such anxiety, coupled with possible interest increase, accelerates the consumers’ decision.”

Mr. Chatichai said the bank managed to extend 9 billion baht in housing loans in the first five months of this year. It set a target to extend 21 billion baht in new housing loans this year.

Normally, he added, the housing loans would expand significantly in the second half of the year. So, it is expected the target would be reached.

--TNA 2005-06-05

[ArtfulD]

They rush to buy now for fear of missing out and higher building costs, take out huge loans and then the higher rates afterwards make em go bankrupt!

First time ever I`ve heard of higher interest rates as a good boost to housing growth.

[The_Moog]

Yeah, this is just rubbish ! Very, very tenuous connections.

Its true that if you can take out a fixed rate mortgage, then an impending rise to rates may impel you to borrow now and lock in your payables.

Yes inflation in building materials prices does happen, but a sensible person doesn't buy a house today in case the price of concrete rises.

The savings on the bricks is negated by the higher interest rates.