Has bank lending dried up for home purchases (in CM and area)?

[muskoka]

We have our home on the market (+6 months) and it seems we are well priced by all accounts, quite a few interested (Thai) buyers, but none seem to be able to get bank financing. Just wondering if we should be focusing on Expat buyers and forget the Thai market???

Any input welcome.

Doug

[anto]

Yes ,why did you not do that from the start .?When i sold my last house near Doi Saket ,plenty of Thai dreamers came .(bank would give them up to 80%with a good job ,but they never had the 20%).Sold to a Farang in the end .

[robertthebruce]

Farang always.... MORE MONEY....

[bangmai]

I'm glad to read that they are requiring 20% down. The GFC would never have happened, had that been the case in America. Downpayment is the single biggest factor in determining default. It's soemething else to consider when buying....who will I sell too? Perhaps a rent to own contract?

[ilostmypassword]

I'm glad to read that they are requiring 20% down. The GFC would never have happened, had that been the case in America. Downpayment is the single biggest factor in determining default. It's soemething else to consider when buying....who will I sell too? Perhaps a rent to own contract?

One of the reasons that Texas survived the latest meltdown so well is that it requires all buyers to put up 20% of the mortgage. Texas learned it's lesson in the wake of the savings & loan meltdown caused by deregulation during the reign of a resident whose name I can't recall. Texas got bailed out then by most of the rest of the country. Anyway, despite the apparent success of this strict bank regulation, I am against any government interference in the sacred workings of the marketplace.

[bangmai]

that would be for conventional....you can still get VA, FHA loans in Texas for way less than 20% down. I actually bought a Townhouse for 15 cents on the Dollar, from New Horizon Mortgage, Houston TX, but the collateral was in Phoenix. My nephew just bought in Minneapolis, and was offered a zero down option with a VA backed loan.

[NancyL]

Yes. I remember as newlyweds in Texas in the early 70s we were fortunate enough to work for a major corporation that actually offered a loan program for first-time home home buyer's down payment, so they could come up with the 20% needed for a mortgage. Even with that -- and both of us working good paying jobs -- we were run thru the ringer by the bank to get the loan. And (get this) we were buying a home owned by an officer of the bank. Talk about a bank being conservative.

Too bad they all didn't stick with those policies.

Then in the late '90s we qualified for a mortgage over the phone with some outfit I can't really remember despite owning our own business with rather irregular cash flow. They weren't concerned with how much we put down and were surprised when I suggested putting more down to avoid mortgage insurance. As it turned out the mortgage outfit was bought and sold a few times and eventually went bankrupt. I think Washington Mutual was in the equation somehow.

[ilostmypassword]

that would be for conventional....you can still get VA, FHA loans in Texas for way less than 20% down. I actually bought a Townhouse for 15 cents on the Dollar, from New Horizon Mortgage, Houston TX, but the collateral was in Phoenix. My nephew just bought in Minneapolis, and was offered a zero down option with a VA backed loan.

But you had collateral. So that is like putting money down. As for you nephew, he's a veteran. That's a special group and a gradually shrinking portion of the population.

[bangmai]

It was the collateral to the foreclosed loan that I bought from them. The 20% downpayment myth....http://themortgagereports.com/16212/20-percent-downpayment-myth-low-downpayment-options the author is a licensed mortgage broker in Texas. Next.

[mesquite]

This is why I love renting. 0 percent down and no risk.

[eyecatcher]

We have just been going through this process for the last 3 months. We wanted a mortgage for the existing house and another one for a new house I am building. The refinance of our existing didn’t require another 20% its just a straight pay off by the new bank back to the old bank. The bigger loan for the new house; also got exactly what we asked for,as we just manipulated the figures for the house cost;(on the banks advice!!) so no 20% deposit there either. We did have a very nice travelling bank representative though which was most important.

Two of the banks did say that loans are much more difficult to achieve now, with so many recent defaulter plus the fact that Thailands economy is 5yrs behind the West and they didn’t have the foresignt to see it like everyone else. All they see now is the Chinese economy set back so they are hesitant.

[MastaMak]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

[JaseTheBass]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

Basically, because Thais have no idea about long term business goals so the markets here don't work as they do back in the real world. They want as much as possible today and to hell with tomorrow.

[anto]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

That would be close to a 20% return.Seems impossible to ME .There must be a catch ? Anyway this is Thailand not the US .

[NancyL]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

I think it's more "the 1% rule" in the U.S., but it's still no where close to the rent here. Much better value here for renters.

[ilostmypassword]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

Basically, because Thais have no idea about long term business goals so the markets here don't work as they do back in the real world. They want as much as possible today and to hell with tomorrow.

This remark is completely incoherent. Are you referring to Thai landlord's or Thai tenants? Anyway rental rates here, as in any free market have nothing to do with the alleged character of the locals and everything to do with the laws of supply and demand.

[bangmai]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

You're a couple of years late....but you could have easily done that in Phoenix, Las Vegas, and Florida from 2009-2012. The townhouse I previously mentioned, was rented out for two years at 569 per month. That's a 31% gross yield. I allow 40% for expenses, so 18.6% net. Even with management in place, you need to be vigilante.

[bangmai]

Here is what 50K USD will get you in Colorado. It's 112 years old, but decent. http://www.realtor.com/realestateandhomes-detail/1437-E-Orman-Ave_Pueblo_CO_81004_M17507-13735?row=6

[Berkshire]

Yes ,why did you not do that from the start .?When i sold my last house near Doi Saket ,plenty of Thai dreamers came .(bank would give them up to 80%with a good job ,but they never had the 20%).Sold to a Farang in the end .

Or maybe it could be that Thais typically prefer new homes and farangs will buy most anything at any price.

[bangmai]

The legalities/grey areas of foreign ownership eliminates about 80% of prospective buyers from the get go. If the farangs were that much of a pushover you wouldn't see the high days on market numbers. Same with selling to the Chinese in America...it's doable, but they aren't a pushover by any means. In an article posted here, yesterday, it stated that the Chinese spend more per day here than the Euros....but to the dismay of every bar renter; it's not on 300 thb pints of beer.

[Robert24]

not much has changed in terms of BoT requirements about mortgages ftom banks recently as far as I know. the requirement for banks to insist on a 20% down payment has been introduced a while back. And banks tend to do a proper background check before approving a mortgage for good reasons. So I don't think much has changed recently. Agree the market is slow around Chiang Mai, so you should target any buyers whether foreigners or Thais.

[SamSipEt]

At least 50% of this thread is way off topic.

I don't care two hoots about what so and so has done in the US but I am (vaguely) interested in what is happening in the Thai market.

Come on people please lets try and keep this on topic.

[MaeJoMTB]

not much has changed in terms of BoT requirements about mortgages ftom banks recently as far as I know. the requirement for banks to insist on a 20% down payment has been introduced a while back. And banks tend to do a proper background check before approving a mortgage for good reasons. So I don't think much has changed recently. Agree the market is slow around Chiang Mai, so you should target any buyers whether foreigners or Thais.

My misses got a bank home loan 2 years back with a 10% deposit and faked employment (she had no job).

Wasn't all that hard either, hardly any checks.

[Robert24]

not much has changed in terms of BoT requirements about mortgages ftom banks recently as far as I know. the requirement for banks to insist on a 20% down payment has been introduced a while back. And banks tend to do a proper background check before approving a mortgage for good reasons. So I don't think much has changed recently. Agree the market is slow around Chiang Mai, so you should target any buyers whether foreigners or Thais.

My misses got a bank home loan 2 years back with a 10% deposit and faked employment (she had no job).

Wasn't all that hard either, hardly any checks.

Maybe that was before the new BoT requirements came into force about the 20% down payment. And not sure whether no background checks and using faked employment is the norm or exception. My guess is that this doesn't work anymore otherwise NPL nbrs would be through the roof.

[eyecatcher]

not much has changed in terms of BoT requirements about mortgages ftom banks recently as far as I know. the requirement for banks to insist on a 20% down payment has been introduced a while back. And banks tend to do a proper background check before approving a mortgage for good reasons. So I don't think much has changed recently. Agree the market is slow around Chiang Mai, so you should target any buyers whether foreigners or Thais.

My misses got a bank home loan 2 years back with a 10% deposit and faked employment (she had no job).

Wasn't all that hard either, hardly any checks.

Maybe that was before the new BoT requirements came into force about the 20% down payment. And not sure whether no background checks and using faked employment is the norm or exception. My guess is that this doesn't work anymore otherwise NPL nbrs would be through the roof.

did they come into force last week?

read my post above. we have just acquired 2.2 million,in two loans; last week; no deposits and yes I prepared a new build cost and the wife translated it and the bank advisor asked us to over egg it a bit to save us paying the 20% deposit.

[bangmai]

the appraisers can make or break deals. Here, they work for the bank in question, but technically, they should be impartial and independent, stating what the house is actually worth, and not make it a reflection of the borrowers credit. We sold to a Thai lady, 7 years ago, and she had her business accounts at the bank, and was putting 50% down. The appraisers pulled up to the curb, identified themselves to me, smoked a cigarette or two, snapped a few photos, and left. I know many don't care about the US, but after all it is the largest economy ever known, and most economies are modeled after it. So when people that get loans that were rigged, start defaulting; there are a lot of skeletons that can surface. The defaults generally come in huge waves. Buying under appraisal is great, and could save you on the downpayment, but colluding with a loan broker or appraisser to inflate the value of the collateral is bank fraud, with a very well marked trail.

Yield is not that significant for only one home that you will live in (until you need to rent it out), but the paltry sums many will settle for here, defies logic, with pretty high costs involved in buying or selling. You can buy a REIT like "BX" and get 7% dividends, and when you need to liquidate, it's a 7 Dollar brokerage fee. They are actually the largest owner of single family homes in America. Cigarette companies and electric companies will give you about 5%....and when things get really bad; they may skip paying rent, but never skip the ciggies. So paying 2000000 THB for a house, in a bogus company name, or grey area structure, to rent to gypsies for 7000 THB per month is just bad business. 4.2% before you paid for your first light bulb?

[MastaMak]

Sorry if not totally related, but I read that in the US you can buy a house for 50k USD and rent it for 750 USD per month (I think they call it the 1.5% rule). I have a few condos here, but I'm nowhere near that on the rent. How come there is such a big difference?

You're a couple of years late....but you could have easily done that in Phoenix, Las Vegas, and Florida from 2009-2012. The townhouse I previously mentioned, was rented out for two years at 569 per month. That's a 31% gross yield. I allow 40% for expenses, so 18.6% net. Even with management in place, you need to be vigilante.

Thank you for your insight, you seem to be very knowledgeable about real estate. I'm from Switzerland and it's almost impossible for anyone to buy a house there as the 10% down payment is too much to start with.

And sorry if I derailed the topic.