Last-chance Packages Before Interest Rates Rise

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MORTGAGES: Finding the best fixed-rate deal

Banks are serving up last-chance packages before interest rates rise

BANGKOK: -- With interest rates on the rise, home buyers are seeking mortgages offering the best possible deal when it comes to fixed-rate promotion periods.

Before signing a mortgage contract, experts suggest home buyers shop around for a loan with the longest fixed-rate period at the lowest interest rate.

Most banks have taken a look at customer demand and are offering a “last chance” for fixed-rate packages before rates rise further.

The Government Housing Bank - the largest state-owned mortgage lender - provides the longest fixed-rate period in the industry at five years, compared with a maximum three-year period on offer at commercial banks.

The bank offers four packages: a first-year fixed interest rate of 2.75 per cent; a mortgage with the first two years fixed - 3.5 per cent for the first year and 3.75 per cent for the second; a three-year

fixed-rate deal, carrying 3 per cent for the first year, 4 per cent for the second, and 5 per cent for the third; and a five-year fixed rate at 5.5 per cent.

The maximum loan that will be granted is 85 per cent of the appraised value, and the maximum term is 30 years.

Siam Commercial Bank - whose 20-per-cent share of the housing-loan market ranks it No 1 - is offering three mortgage packages.

Its only fixed-rate package is a first-year deal at 3.25 per cent. The other two packages offer floating rates: the minimum lending rate (MLR) - currently 5.75 per cent - minus 1.5 per cent for the first two years, and the MLR minus 1 per cent for the first three years.

In addition, the bank’s customers are charged an arrangement fee of 0.25 per cent of the total credit line.

Siam Commercial Bank sets a maximum mortgage amount of 85 per cent of the appraised value, with a maximum term of 30 years.

The Kingdom’s largest bank, Bangkok Bank, offers three mortgage options: a one-year fixed rate of 2.95 per cent; a two-year fixed rate of 4 per cent; and a three-year fixed rate of 5.25 per cent. Thereafter, it charges at the MLR (5.75 per cent) until the end of the loan contract.

These three packages are available until the end of the month.

The bank offers a maximum mortgage of 80 per cent of the appraised value, or the balance of a refinanced loan. Its maximum loan period is 30 years.

Kasikornbank, another big player in the mortgage market, offers two fixed-rate packages and four floating-rate deals.

One of its fixed-rate packages offers 3 per cent for the first year, the other 4 per cent for the first two years.

Three of Kasikornbank’s floating packages offer: the MLR minus 3 per cent for the first year; the MLR minus 2 per cent for the first two years; and MLR minus 1.25 per cent for the first three years.

After the promotional period of these five packages ends, the bank will charge the MLR minus 0.25 per cent across the board.

The bank’s fourth floating-rate package offers the MLR minus 0.75 per cent throughout the loan term. Kasikornbank’s MLR is also 5.75 per cent.

All of Kasikornbank’s mortgage rates are available only to customers who borrow up to Bt10 million.

Credit is limited to Bt6 million or 80 per cent of the appraised value for finished homes, and 100 per cent of the appraised value for others. The maximum repayment period is 30 years.

Siam City Bank has launched three packages featuring fixed interest rates. It previously offered only floating-rate housing loans.

The packages are: 3.75 per cent for the first year; 4.5 per cent for the first two years; and 5.25 per cent for the first three years. All packages then charge the MLR (5.75 per cent) minus 0.5 per cent throughout the term of the loan.

The new packages are available until the end of the month.

Bank of Ayudhya has a three-year package, offering a fixed 3 per cent in the first year, 4 per cent for the second, and 5 per cent for the third - followed by the MLR minus 0.5 per cent for the remaining years of the contract.

The bank’s MLR is 5.75 per cent.

The mortgage amount is generally limited to 80 per cent of the appraisal value. However, for some residential projects, Bank of Ayudhya may grant as much as 90 per cent of the valuation.

The maximum repayment period is 30 years.

--The Nation 2005-06-06