trogers Posted November 30, 2016 Share Posted November 30, 2016 Developers are facing buyers with mortgage rejection rate from 50% to 70%. http://www.ddproperty.com/th/ข่าวอสังหาริมทรัพย์-บทความ/2016/11/141885/property-developers-call-on-banks-to-ease-home-loa/?utm_source=pgth-newsalert&utm_medium=edm&utm_campaign=dailynews-30Nov2016&utm_content=links Link to comment Share on other sites More sharing options...
TallGuyJohninBKK Posted November 30, 2016 Share Posted November 30, 2016 Other than banks being banks, could it also possible have something to do with the other news we've seen lately that personal debt in Thailand supposedly is currently at an all time high and going higher? If so many Thais can't afford to even buy and keep the car they've previously purchased, how are they going to manage monthly mortgage amounts, including with home loan interest rates here that are considerably higher even now than those available to homebuyers in other countries? Link to comment Share on other sites More sharing options...
trogers Posted December 1, 2016 Author Share Posted December 1, 2016 I like this excuse - If developers can't sell and transfer housing units, how can they continue investing? I wonder if they have even pass Econs 101. When supply exceeds effective demand, do one still produce more? So now they are asking financial institutions to issue sub-prime loans to help them continue investing... Link to comment Share on other sites More sharing options...
TallGuyJohninBKK Posted December 1, 2016 Share Posted December 1, 2016 Presumably, the banks themselves, and the Thai government (what little of it there is) don't want to find themselves getting caught in another Asian Financial Meltdown. So lending standards are being enforced, and they should be. But, re the news report you linked above, that doesn't really explain situations as mentioned in the report where Thais have been qualified by their bank for a home loan, and then later told now they're not qualified, even though supposedly their economic circumstances had not changed. However, I'm just guessing, those kinds of denials are the exceptions, and the more common denials are simply for folks who reasonably cannot be reliably expected to pay back the amount of mortgage loan they're seeking to obtain. Link to comment Share on other sites More sharing options...
trogers Posted December 1, 2016 Author Share Posted December 1, 2016 3 minutes ago, TallGuyJohninBKK said: Presumably, the banks themselves, and the Thai government (what little of it there is) don't want to find themselves getting caught in another Asian Financial Meltdown. So lending standards are being enforced, and they should be. But, re the news report you linked above, that doesn't really explain situations as mentioned in the report where Thais have been qualified by their bank for a home loan, and then later told now they're not qualified, even though supposedly their economic circumstances had not changed. However, I'm just guessing, those kinds of denials are the exceptions, and the more common denials are simply for folks who reasonably cannot be reliably expected to pay back the amount of mortgage loan they're seeking to obtain. The time period between booking a condo unit and construction completion, what would stop buyers from getting into more debts? Banks would look at present debt loads before approving mortgages... Link to comment Share on other sites More sharing options...
TallGuyJohninBKK Posted December 1, 2016 Share Posted December 1, 2016 Well, your article above referred to situations where the applications financials had NOT changed from getting an original approval to then later getting denied.... Link to comment Share on other sites More sharing options...
trogers Posted December 1, 2016 Author Share Posted December 1, 2016 5 minutes ago, TallGuyJohninBKK said: Well, your article above referred to situations where the applications financials had NOT changed from getting an original approval to then later getting denied.... The article quotes only from the perspective of developers... We need to see beyond, and I had seen the mortgage approval process of banks from my friend's experience a year ago. But the article raises my awareness of the desperate situation of developers and how much longer this desperation would filter to those who acquired their condo units... Link to comment Share on other sites More sharing options...
TallGuyJohninBKK Posted December 1, 2016 Share Posted December 1, 2016 yes, agreed, it's obviously a very one-sided report. But an interesting one nonetheless in terms of what it suggests about the state of the residential RE market right now. Link to comment Share on other sites More sharing options...
impulse Posted December 1, 2016 Share Posted December 1, 2016 One of the many life lessons they didn't teach me in school: You can get a mortgage on a house, then get financing on a car. But it's a lot harder to do it the other way around if the mortgage gets even close to your qualification limits. Link to comment Share on other sites More sharing options...
cheeryble Posted December 5, 2016 Share Posted December 5, 2016 Seems to me well over 90% of the units going up are of the very compact (30sqm+) size catering to the new demographic of young Thais with modestly paid but OK jobs like bank, hospital, insurance, teaching, IT, etc etc. These young people are getting out of the villages and the trend into town will continue. A lot of students' parents are buying units for their kids years at college. I've seen this happen.......after sale it worked out at four years free rent and some capital rise.....capital rise might not apply in the present situation unless held longer term......but parents are certainly buying for their student/postgrad kids. The pricing of units seems to be largely set so repayments of 10k pm will do it.....not so huge, especially if shared by a working couple. It is no surprise at all that many young folk will try it on and be refused at the bank. Good thing. The condos built just the last few years seem to have filled (at least in CM which I know.....One Plus, D Condo etc ), and if there is a slowdown (numbers anyone?) in buying for the new ones that's a normal market and developers will slow down additional supply til a balance comes. They will be restricted by the banks anyway, quite rightly. One thing's for sure, the demographic change, the move into town, will continue. Link to comment Share on other sites More sharing options...
trogers Posted December 5, 2016 Author Share Posted December 5, 2016 1 hour ago, cheeryble said: Seems to me well over 90% of the units going up are of the very compact (30sqm+) size catering to the new demographic of young Thais with modestly paid but OK jobs like bank, hospital, insurance, teaching, IT, etc etc. These young people are getting out of the villages and the trend into town will continue. A lot of students' parents are buying units for their kids years at college. I've seen this happen.......after sale it worked out at four years free rent and some capital rise.....capital rise might not apply in the present situation unless held longer term......but parents are certainly buying for their student/postgrad kids. The pricing of units seems to be largely set so repayments of 10k pm will do it.....not so huge, especially if shared by a working couple. It is no surprise at all that many young folk will try it on and be refused at the bank. Good thing. The condos built just the last few years seem to have filled (at least in CM which I know.....One Plus, D Condo etc ), and if there is a slowdown (numbers anyone?) in buying for the new ones that's a normal market and developers will slow down additional supply til a balance comes. They will be restricted by the banks anyway, quite rightly. One thing's for sure, the demographic change, the move into town, will continue. The big boys (Public Listed) do not rely on banks for capital, and would not be restricted... Link to comment Share on other sites More sharing options...
chiang mai Posted December 5, 2016 Share Posted December 5, 2016 3 minutes ago, trogers said: The big boys (Public Listed) do not rely on banks for capital, and would not be restricted... I'll bet they do, it would be a miracle if they didn't. Link to comment Share on other sites More sharing options...
trogers Posted December 5, 2016 Author Share Posted December 5, 2016 1 minute ago, chiang mai said: I'll bet they do, it would be a miracle if they didn't. That's why they got public listed, to tap the capital market through the sales of shares and bonds... Link to comment Share on other sites More sharing options...
chiang mai Posted December 5, 2016 Share Posted December 5, 2016 7 minutes ago, trogers said: That's why they got public listed, to tap the capital market through the sales of shares and bonds... Which three balance sheets should we examine, name three Thai companies you want to test your theory on. Here's Italian/Thai, note their liabilities and debt. http://www.itd.co.th/files/annual/en/ar-2009-e.pdf Link to comment Share on other sites More sharing options...
trogers Posted December 5, 2016 Author Share Posted December 5, 2016 34 minutes ago, chiang mai said: Which three balance sheets should we examine, name three Thai companies you want to test your theory on. Here's Italian/Thai, note their liabilities and debt. http://www.itd.co.th/files/annual/en/ar-2009-e.pdf Italian Thai is a contractor of civil works, and not a developer. Try Lumpini, Supalai and AP. Link to comment Share on other sites More sharing options...
chiang mai Posted December 5, 2016 Share Posted December 5, 2016 9 minutes ago, trogers said: Italian Thai is a contractor of civil works, and not a developer. Try Lumpini, Supalai and AP. http://www.set.or.th/set/newsdetails.do;jsessionid=1BF9FD10C0C815010D3EC9AE4D8DE2F6?type=H&time=1257904920000&filename=dat%2Fnews%2F200911%2F09038281.e09&source=SPALI&headline=Financial+assistance+to+subsidiary&symbol=SPALI&language=t&country=TH Link to comment Share on other sites More sharing options...
trogers Posted December 5, 2016 Author Share Posted December 5, 2016 3 minutes ago, chiang mai said: http://www.set.or.th/set/newsdetails.do;jsessionid=1BF9FD10C0C815010D3EC9AE4D8DE2F6?type=H&time=1257904920000&filename=dat%2Fnews%2F200911%2F09038281.e09&source=SPALI&headline=Financial+assistance+to+subsidiary&symbol=SPALI&language=t&country=TH This is about giving financial assistance to a subsidiary company that provides management services in Phuket. Link to comment Share on other sites More sharing options...
chiang mai Posted December 5, 2016 Share Posted December 5, 2016 15 minutes ago, trogers said: This is about giving financial assistance to a subsidiary company that provides management services in Phuket. Page 6 of their consolidated statement, Loans From Financial Institutions: http://spali.listedcompany.com/misc/ShareholderMTG/agm2015/20150506-spali-agm2015-minutes-en.pdf Link to comment Share on other sites More sharing options...
chiang mai Posted December 5, 2016 Share Posted December 5, 2016 ....and, even Apple borrows money from the banks: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11384597/Apple-to-borrow-5bn-despite-record-profits.html Link to comment Share on other sites More sharing options...
trogers Posted December 5, 2016 Author Share Posted December 5, 2016 1 hour ago, chiang mai said: Page 6 of their consolidated statement, Loans From Financial Institutions: http://spali.listedcompany.com/misc/ShareholderMTG/agm2015/20150506-spali-agm2015-minutes-en.pdf Project loans is less than 15% of total loans, most of which are debentures. Compared with no-name developers who have to pledge the land to obtain a bank loan to start construction, and the loan would only be issued on achieving 50% bookings... Link to comment Share on other sites More sharing options...
chiang mai Posted December 5, 2016 Share Posted December 5, 2016 35 minutes ago, trogers said: Project loans is less than 15% of total loans, most of which are debentures. Compared with no-name developers who have to pledge the land to obtain a bank loan to start construction, and the loan would only be issued on achieving 50% bookings... The question was whether large constructions firms in Thailand borrow from banks, the answer is yes they do, regardless of whether they are a public company or not. Whether or not those same companies rely on banks is another subject that will be very difficult to answer without some insider knowledge of individual companies or banks - I suppose the answer to that question must depend on the state of the economy at any point in time and on how successful these companies are at weathering economic downturns. Link to comment Share on other sites More sharing options...
trogers Posted December 5, 2016 Author Share Posted December 5, 2016 18 minutes ago, chiang mai said: The question was whether large constructions firms in Thailand borrow from banks, the answer is yes they do, regardless of whether they are a public company or not. Whether or not those same companies rely on banks is another subject that will be very difficult to answer without some insider knowledge of individual companies or banks - I suppose the answer to that question must depend on the state of the economy at any point in time and on how successful these companies are at weathering economic downturns. 5 hours ago, cheeryble said: Seems to me well over 90% of the units going up are of the very compact (30sqm+) size catering to the new demographic of young Thais with modestly paid but OK jobs like bank, hospital, insurance, teaching, IT, etc etc. These young people are getting out of the villages and the trend into town will continue. A lot of students' parents are buying units for their kids years at college. I've seen this happen.......after sale it worked out at four years free rent and some capital rise.....capital rise might not apply in the present situation unless held longer term......but parents are certainly buying for their student/postgrad kids. The pricing of units seems to be largely set so repayments of 10k pm will do it.....not so huge, especially if shared by a working couple. It is no surprise at all that many young folk will try it on and be refused at the bank. Good thing. The condos built just the last few years seem to have filled (at least in CM which I know.....One Plus, D Condo etc ), and if there is a slowdown (numbers anyone?) in buying for the new ones that's a normal market and developers will slow down additional supply til a balance comes. They will be restricted by the banks anyway, quite rightly. One thing's for sure, the demographic change, the move into town, will continue. The point is not whether their debt instruments are bought by banks, but whether these public listed developers will be restricted by the banks in building more Condo units for the market. And the answer is no. Banks buying debentures or bonds cannot place conditions on the companies, unlike those conditions placed on construction loans for projects of small developers. Link to comment Share on other sites More sharing options...
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