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National Credit Bureau blamed for rejection of 30% of home loan applications

webfact

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webfact Grand Master Member

webfact

Posted
Posted

National Credit Bureau blamed for rejection of 30% of home loan applications

 

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BANGKOK: -- The Finance Ministry says more than 100,000 home buyers applying for home loans were rejected by banks this year.

 

This was disclosed by deputy minister of Finance Mr Wisut Srisuphan yesterday at the opening address of the Home and Condo Expo at Bitec Bangna.

 

Mr Wisut disclosed that more than 100,000 applicants of home loans or about 30%  have failed to receive approval.

 

His disclosure does not bode well for real estate developers at the expo which were giving out special promotions such as low interest rates and discounts on home purchases as high as one  million baht.

 

Some even had special deals forgoing transfer fees and other discounts lasting up to 1 – 10 years. One company even gave away 1 years free expressway charges for potential buyers.

 

Commenting on this development, the president of the Housing Business Association Mr Athib Fisanont said this mainly attributed to financial institutions basing a major portion of their qualification process on information from the National Credit Bureau.

 

Full story: http://englishnews.thaipbs.or.th/national-credit-bureau-blamed-rejection-30-home-loan-applications/

 
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-- © Copyright Thai PBS 2016-10-07

 

 

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GarryP Platinum Member

GarryP

Posted
Posted
Just now, trogers said:

 

Starts off at 30% from the credit bureau, and up to a further 40% by banks...to a total of 70%.

That is the figure I heard too. 70%. That is a hell of a lot of rejections. Banks are asking a lot more questions than they used to. In particular what monthly payment obligations the prospective purchaser has, rather than being purely based on income. It makes sense actually. 

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trogers Platinum Member

trogers

Posted
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12 minutes ago, GarryP said:

That is the figure I heard too. 70%. That is a hell of a lot of rejections. Banks are asking a lot more questions than they used to. In particular what monthly payment obligations the prospective purchaser has, rather than being purely based on income. It makes sense actually. 

 

Not surprised at the high rejection rate. To many, it's like lottery.

Ten years for the car, and a further 30 years for the property.

 

Hope the rainy season don't ever come...

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jamesbrock Silver Member

jamesbrock

Posted
Posted (edited)

I'm not sure whether the NCB should be blamed or thanked?

 

Sure, if one is a property developer, or receives money from property developers and development, it's not a good thing, but if your business model is built around driving people already crushed with debt further into the ground, then I have no sympathy for you.

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trogers Platinum Member

trogers

Posted
Posted
1 minute ago, jamesbrock said:

I'm not sure whether the NCB should be blamed or thanked?

 

Sure, if one is a property developer, or receives money from property developers and development, it's not a good thing, but if your business model is built around driving people already crushed with debt further into the ground, then I have no sympathy for you.

 

  •  

     

     

     

     

 

Economic growth based on debts is like a drug addict acquiring his fix.

 

Watch out for the withdrawal symptoms...

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trogers Platinum Member

trogers

Posted
Posted
3 minutes ago, khunpa said:

I just read another place, that the economy is going great and everything is wonderful.

 

Now I am confused??

 

 

 

 

Everyone is hoping, but sector wise, ghost buildings are starting to pop up, while quite a number of people are still clinging on to brochures...

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digibum Silver Member

digibum

Posted
Posted
47 minutes ago, GarryP said:

That is the figure I heard too. 70%. That is a hell of a lot of rejections. Banks are asking a lot more questions than they used to. In particular what monthly payment obligations the prospective purchaser has, rather than being purely based on income. It makes sense actually. 

 

Yes, banks don't like losing money :-)

 

Household debt is at record levels in Thailand.  Thais have been encouraged to buy homes, appliances, cars, etc all on credit.  They're choking on credit.  

 

And yet the economy (outside of tourism) is still contracting.  

 

If the weak economic growth that Thailand has been able to eek out has been partially fueled by easy credit, imagine what happens when that cheap credit dries up.  When non-performing loans start hitting the balance sheets of banks and they ratchet back, well, one only has to look to the West to see what happens.  

 

It doesn't take an economic genius to figure out why foreign investment in Thailand is also slowing (some might say, grinding to a halt).  

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SoFarAndNear Silver Member

SoFarAndNear

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Sooner or later the big bubble called Thai Real Estate will collapse. The market is so damn overflooded with condos in Bangkok. I am currently looking for a new rental and I am amazed how much is free. And almost every agent is lying and is telling me I that I should sign quickly because many other clients want to have the room. A few months later  the condos are still available.

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rgrdns Senior Member

rgrdns

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Posted
1 hour ago, SoFarAndNear said:

Sooner or later the big bubble called Thai Real Estate will collapse. The market is so damn overflooded with condos in Bangkok. I am currently looking for a new rental and I am amazed how much is free. And almost every agent is lying and is telling me I that I should sign quickly because many other clients want to have the room. A few months later  the condos are still available.

You're right....although this is going on for many years and still no burst in sight......I guess real estate market is one big laundry machine. 

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khunpa Gold Member

khunpa

Posted
Posted
1 hour ago, SoFarAndNear said:

Sooner or later the big bubble called Thai Real Estate will collapse. The market is so damn overflooded with condos in Bangkok. I am currently looking for a new rental and I am amazed how much is free. And almost every agent is lying and is telling me I that I should sign quickly because many other clients want to have the room. A few months later  the condos are still available.

 

Based on people now being refused to borrow money for a home they can not afford is a good sign of a coming collapse or at least an attempt to drag the time to the collapse.

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digibum Silver Member

digibum

Posted
Posted
13 hours ago, rgrdns said:

You're right....although this is going on for many years and still no burst in sight......I guess real estate market is one big laundry machine. 

 

What is mostly troubling is the massive amount of "luxury" condos.  Who can afford them?  Even at the lower end of "luxury" condos, those go for what, 25,000 - 30,000 a month?  That's over 3x the amount someone making minimum wage makes a month even if they work 30 days a month.  And it's still more than most young university educated people make a month.  

 

Let's just say that the same general rules of financial responsibility work in Thailand as they do in western societies.  They say you should never spend more than 1/3 of your income on housing.  So, at a minimum, renters would need to be making $75K - $90K a month.  Are there really that many people making that kind of money that everywhere you look there are construction cranes finishing up another high-rise condo development?  

 

My guess is that given the relatively small middle-class who might be able to afford these kinds of units and the massive lower-class who certainly cannot afford them, the rich are simply buying them in bulk and hoping for appreciation.  The demand is not for the housing but for assets in which rich people can park their money.  That's what is keeping the bubble from bursting.  The rich still have enough excess money that they can afford to keep buying assets regardless of whether or not there are enough renters at prices that justify the cost.  

 

Bangkok real estate reminds me a lot of that scene in The Big Short when they go down to Florida and they see all of the homes sitting empty.  It's so obvious that something is out of whack but it's not being reflected accurately in the market.  

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williamgeorgeallen Senior Member

williamgeorgeallen

Posted
Posted

so a few years back when i thought it was a good idea to buy property in thailand i went to the bank to ask about a mortgage so i could leverage my investment. i had a work permit so i was told i could get a 10 year loan at 10% with 50% deposit. then the kicker, the manager wanted a 1% cash fee to approve the loan. decided against it. wonder how many of these loans get turned down as people dont want to pay the managers fee.

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trogers Platinum Member

trogers

Posted
Posted
9 hours ago, digibum said:

 

What is mostly troubling is the massive amount of "luxury" condos.  Who can afford them?  Even at the lower end of "luxury" condos, those go for what, 25,000 - 30,000 a month?  That's over 3x the amount someone making minimum wage makes a month even if they work 30 days a month.  And it's still more than most young university educated people make a month.  

 

Let's just say that the same general rules of financial responsibility work in Thailand as they do in western societies.  They say you should never spend more than 1/3 of your income on housing.  So, at a minimum, renters would need to be making $75K - $90K a month.  Are there really that many people making that kind of money that everywhere you look there are construction cranes finishing up another high-rise condo development?  

 

My guess is that given the relatively small middle-class who might be able to afford these kinds of units and the massive lower-class who certainly cannot afford them, the rich are simply buying them in bulk and hoping for appreciation.  The demand is not for the housing but for assets in which rich people can park their money.  That's what is keeping the bubble from bursting.  The rich still have enough excess money that they can afford to keep buying assets regardless of whether or not there are enough renters at prices that justify the cost.  

 

Bangkok real estate reminds me a lot of that scene in The Big Short when they go down to Florida and they see all of the homes sitting empty.  It's so obvious that something is out of whack but it's not being reflected accurately in the market.  

 

Property tax should make it painful to speculate on real estate.

 

You can hold physical gold for decades and reap the appreciation, but real estate is an economic factor of production, and not be allowed to sit idle.

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Grubster Senior Member

Grubster

Posted
Posted
3 hours ago, trogers said:

 

Property tax should make it painful to speculate on real estate.

 

You can hold physical gold for decades and reap the appreciation, but real estate is an economic factor of production, and not be allowed to sit idle.

Careful what you wish for. We started that property tax a long time ago,  now they are so high that retired people are paying more now than when they had mortgage payments and are then booted out of their house when they can no longer afford it. really sad stuff.

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trogers Platinum Member

trogers

Posted
Posted
1 hour ago, Grubster said:

Careful what you wish for. We started that property tax a long time ago,  now they are so high that retired people are paying more now than when they had mortgage payments and are then booted out of their house when they can no longer afford it. really sad stuff.

 

Depends. Even Singapore has a tax discount for owner-occupied first home, while subsequent ones are fully taxed.

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Grubster Senior Member

Grubster

Posted
Posted
3 minutes ago, trogers said:

 

Depends. Even Singapore has a tax discount for owner-occupied first home, while subsequent ones are fully taxed.

once their foot is in the door, one thing is sure the tax will never go down, can only go up and will.

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trogers Platinum Member

trogers

Posted
Posted
10 minutes ago, Grubster said:

once their foot is in the door, one thing is sure the tax will never go down, can only go up and will.

 

It's a political matter as to whether tax rates increase or remains.

 

Valued added tax of 7% in Thailand remains the same over the past two decades.

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Grubster Senior Member

Grubster

Posted
Posted
2 minutes ago, trogers said:

 

It's a political matter as to whether tax rates increase or remains.

 

Valued added tax of 7% in Thailand remains the same over the past two decades.

That is true, those politicians sure no how to spend money. Your money. 

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trogers Platinum Member

trogers

Posted
Posted
7 minutes ago, Grubster said:

That is true, those politicians sure no how to spend money. Your money. 

 

Worries on how politicians spend tax collected is less than worries over politicians spending money that are not even collected.

 

That's how the 19 trillions national debt of the US came about.

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Grubster Senior Member

Grubster

Posted
Posted
3 minutes ago, trogers said:

 

Worries on how politicians spend tax collected is less than worries over politicians spending money that are not even collected.

 

That's how the 19 trillions national debt of the US came about.

i never have understood the debt, I had an old friend back home that used to work for the fed and after a few hours of explanation I figured out that I am not smart enough to grasp what the hell he was talking about, I do know the world will keep turning and it is not the same as personal debt. After all where does the worlds money currently come from. I don't want to debate that topic as I said, its not a simple issue. I do remember my folks saying " you will have to pay this debt some day" well I'm getting closer to cashing in my chips now and I don't know if I would be any more accurate if I tell my grandchildren that they will have to pay this debt some day. The older I get the less sense of urgency I feel about it. I am much more worried about a big war coming that could really adversely effect my grand children. Gotta go nice chatting with you. I surely don't disagree with you on anything.

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