Help for low-income homebuyers

Kasikornbank has joined up with L.P.N. Development Plc to offer special interest rates and financial packages for lower-income earners to reduce loan-rejection rates and help homebuyers.

Krisada Lamsam, a Kasikornbank executive vice-president, said the bank would support pre- and post-finance facilities for the developer. The package would include consultation for loan pre-approvals. This process would take three days so buyers could plan budgets to free up sufficient funds for repayments.

Mr Krisada (left) of Kbank and Mr Opas of L.P.N. exchange contract documents at yesterday's agreement signing ceremony.

The bank would help buyers to employ financial discipline by making regular deposits to a Kbank savings account of about 2,600 baht a month toward a downpayment for the purchase of a unit. A downpayment is usually 20% of the total price and usually takes 12-18 months to pay off.

Once units are transferred to buyers, they must service their loans via direct debit from a savings account, in a monthly instalment of about 3,000 baht.

This system will apply to buyers of Lumpini Condotown Bodin Decha-Ramkhamhaeng, which will officially be launched tomorrow. The 2.6-billion-baht project will comprise 3,397 units, sized from 25 to 35 square metres, priced from 650,000 baht a unit, or 26,500 baht per sq m. Construction will start next month and complete in June next year.

''This is our first financial package for the real estate sector. We aim to help people in the lower-end segment to own a unit and we will educate and advise them on how to get loans approved,'' Mr Krisada said.

The package would also include the waiver of appraisal and loan-application fees, while the interest rate offered to customers would be 3.75% per year for the first year and MLR minus 0.5% afterwards. Kbank's current MLR (minimum lending rate) is 7.75% per year.

The bank expects to release 1.5 billion baht to support L.P.N. in the development of the project.

Chatchai Payuhanaveechai, a bank senior vice-president, said Kbank was considering launching housing loans, with a fixed interest-rate package for one to three years, in April. Last year, it did not offer any fixed-interest packages.

He expected interest rates to fall by one to 1.5 percentage points this year due to a lower inflation rate expected at 1.5% to 2.5%, compared to 4.7% last year.

Opas Sripayak, L.P.N.'s managing director, said it was the first time that a commercial bank had offered a full financial package to first-time buyers whose monthly household incomes were around 15,000 baht.

This segment typically faces difficulty obtaining housing loans or owning units that match their payment ability.

''The programme will help our customers to have financial discipline and we expect to see a lower rejection rate from the bank,'' he said.

Source: Bangkok Post by Kanana Katharangsiporn
Friday February 09, 2007