Housing and car loan approval rate slowing down

[Thaivisa News]

Bangkok: – About one in four hire-purchase applications for cars and condominium units would likely be rejected as financial institutions try to prevent the problem of non-performing loan.

Industry sources said the stringent loan review is deemed necessary for two reasons – rising household debt and economic doldrums, Prachachart Turakij reported.

Kasikorn Leasing has conceded that its leasing portfolios are below target for the past two months. Its loan rejection rate stands at 30 per cent.

From January to February, car sales were 13 per cent lower than the same period last year.

The economic recovery is slower than expected and the household debt has soared to 85.9 per cent with the projection to further rise to 89 per cent by the year’s end.

Loan applicants without fixed income, such as street vendors, farmers and small retailers, are hardest hit in term of passing the credit review.

The average rate for non-performing loans is at 3 per cent for the auto hire purchase industry.

Thai Hire Purchase Association chairman Anuchat Deeprasert said the rejection rate for auto hire purchase has increased from 10 per cent in 2013 to 20 per cent this year.

The repayment period has been cut from seven years to five and leasing companies would demand tougher conditions, such as having a guarantor before approving the loan.

Housing loans are likely to grow below five to six per cent this year because some 40 per cent of applicants have been rejected due to credit risk, CMIB executive Orn-anong Udomkantrong said.

The bank’s housing loan approval rate is about 1 billion baht per month, a sharp drop from 2 billion baht per month, she said.

Real estate developers expect the slow-down in housing loan approval to continue into next year.

[wabothai]

That is a 100% drop.

Worrisome, or a message from Buddha.

[Tomtomtom69]

Probably half of all Thais who are paying off a car on hire purchase can't really afford it. They should introduce more stringent regulations like can't finance more than 25% of their after tax income - as of late 2013/early 2014 they were approving financing based on 50-60% of individual's incomes seemingly without regard to whether they have other debts or not. Simply reckless if you ask me. No wonder there are so many repossessions here and almost nobody owns their own car outright (unless it's a very old car).

[Thai at Heart]

Shame they hadn't been doing this for the last 5 years.....

[Cake Monster]

How is it possible to lend money to people who have little or no tangeable proof of income ?

The banks are obviously seeing into the future with a higher number of NPL,s coming to the fore, and the good times are finished for them.

Maybe Thailand has its very own credit crunch on the way - just thinking

[trogers]

How is it possible to lend money to people who have little or no tangeable proof of income ?

The banks are obviously seeing into the future with a higher number of NPL,s coming to the fore, and the good times are finished for them.

Maybe Thailand has its very own credit crunch on the way - just thinking

Losses due to NPLs would be higher if banks are forced to update the market value of the repossessed assets still in their books.