Monday, August 25, 2008

GH Bank lifts fixed-rate credit lines as home prices increase

GH Bank lifts fixed-rate credit lines as home prices increase


The Government Housing Bank (GH Bank) has increased the maximum credit limit of its fixed-interest campaign for first-time borrowers from 600,000 baht to 1.5 million baht, in line with housing prices that have been pushed up by rising construction costs. Customers applying under the new regulations, which start today, would have two accounts if their requested amount was more than 600,000 baht, according to Jamaree Savetachinda, an executive vice-president of the state bank.

The first account would be a credit line of 600,000 baht, calculated with two special fixed-rate options _ seven years at 5.89% or 10 years at 5.91%. After those periods, the rate would be the minimum retail rate (MRR) minus 0.5%.

The other account would be calculated at MRR-2%, she said. Customers could also request a mortgage loan, with a third account for furniture and decorative items under a credit line of 10% of the property's value.

Under previous criteria, applicants could not have a monthly income above 15,000 baht. The new criteria allow those with higher incomes to apply for loans. In calculating payment capacity and credit, GH Bank will take a 15,000-baht salary as the baseline for 600,000 baht in credit. Larger loans will be calculated in line with these figures.

The bank said a one-million-baht loan repaid over 30 years at 5.9% annual interest would cost 3,600 baht a month.

GH Bank received approval for its new conditions from the Finance Ministry last Thursday. It will now distribute the details to its branches nationwide.

The bank launched its first-time borrower campaign in mid-June but has released only a few hundred million baht from a total credit line of two billion.

Mrs Jamaree said some customers who could not qualify for the campaign under the former credit line chose other offers, while others were asked by the bank to wait for the new criteria.

''The former credit line was not in line with actual housing prices, given rising construction costs,'' she said. ''Though we have increased the amount of credit, the focus is still on low-income earners as it's our aim to support them to get lower interest rates.''

Under the first-time borrower campaign, customers can apply for loans for a house, a house with land, or land for building a house. The bank will release up to 85% of either the selling price or the appraised value of the property, whichever is the lower figure.

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