“The central bank wants the three banks to jointly set the lending criteria for property developers participating in the cheap-housing scheme because these banks don’t have expertise in pre-financing for real estate projects,” said GH Bank senior executive vice-president Chatchai Sirilai.
Under the scheme, the three banks will lend B10 billion each to project developers. The banks will charge 4 per cent for the first two years, followed by the average minimum lending rate minus one percentage point throughout the remainder of the term.
Apart from the B30 billion in pre-financing to developers, GH Bank and the GSB will lend another B20 billion each for mortgages to first-time home owners entering the low-cost housing scheme. Both banks will charge no interest for the first year, 2% for the second and third years, 5% for the fourth to sixth years and floating rates for the remainder.
With the special rate and relaxed debt-servicing limit, those who buy or lease homes priced B700,000 or less will pay a monthly rate of B3,000 for the first three years, B4,000 from the fourth to the sixth years and B4,500 for the remainder.
The scheme is aimed at helping eligible participants afford a 30-year lease or mortgage on a home. The affordable housing will be built by the Treasury Department and private sector. First-time buyers, including state officials, who are self-employed or otherwise earn a low or uncertain income will be eligible.
Mr Chatchai said the B30 billion in pre-financing loans would first be lent to development projects with no more than 200 units and investment of B200-300 million. The three banks will require developers to fund 70% of the project, with loans making up 30%.
GH Bank has frozen most project financing business since the 1997 financial malaise, only extending pre-financing loans to apartment developers where it can to conduct studies on rental demand, he said.
Of the B40 billion in loans to be granted under the low-cost housing scheme, Mr Chatchai said eligible homebuyers filed applications for mortgages totalling B15 billion at GH Bank and GSB from March 23-25. He said 8,000 applicants sought B6.7 billion in mortgages at GH Bank alone, with 300 applications seeking B280 million undergoing approval.
GH Bank estimates its allotment of mortgages will be approved in two months.
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