Deteriorating debt-repayment ability stemming from the rising household debt, especially among earners of less than 15,000 baht a month, has slightly lowered Kasikornbank's mortgage loan approval rate, said executive vice-president Pakorn Partanapat.
Executive vice-presidents Pakorn Partanapat (left) and Chatchai Payuhanaveechai invite people to click ‘Like’ on KBank’s mortgage loan Facebook page for a chance to win a Mercedes-Benz.
The bank's housing loan approval rate has declined to around 50%, he said, without elaborating on the previous figure.
The University of the Thai Chamber of Commerce (UTCC)'s latest survey released on Monday found 64.5% of low-income earners have average debt of 188,774.54 baht per household, up 12% from the previous year and 147,542 baht in 2009.
The Bank of Thailand has also flagged warning about the growing household debt recently.
It said household debt at the end of 2012 stood at around 8 trillion baht.
Of the total, 3.3 trillion were loans owed to commercial banks, 2.7 trillion baht to state-owned banks, and 1 trillion each to cooperatives across the country and loan sharks.
Of the total commercial loans, 2.2 trillion baht was in mortgage loans, 260 billion baht each in credit card and personal loans, and 600 billion baht in auto loans.
The government's populist policies, particularly the first-time car buyer scheme, have been blamed for the rising household debt.
"Normally, debt burden should not exceed 40% of net income. The higher the debt burden the less ability to service debt and borrow," he said.
For example, those who borrow 1 million baht to be repaid in 20 years are required to pay 8,000 baht a month. To quality for securing the 1-million-baht loan, they must earn not less than 20,000 baht a month.
The impact on the bank's loan approval rate is however limited as 80% of its customers earn more than 30,000 baht a month, Chatchai Payuhanaveechai, executive vice-president, said.
The bank aims to expand its mortgage loans by 5-8% from the outstanding loans of 203 billion baht at the end of last year.
At the end of May, KBank's home loans amounted to 215 billion baht.
About the author
- Writer: Darana Chudasri
Position: Business Reporter