Potential Thai home owners have waited for long hours at the Government Housing Bank (GHB) in Bangkok, hoping to obtain the interest-free loans allocated to new buyers.
According to the Bangkok Post, the programme has a total fund of about 25 million baht (US$827,800) available for the first two years of a 30-year interest-free mortgage for homes valued at less than three million baht (US$99,300).
The remaining mortgage will be paid at a rate based on the bank’s conditions. The bank will also pay for the two percent transfer costs and one percent mortgage fee.
By the time the bank opened at 8:30am, the line had stretched to 200. Queue cards were distributed before the bank’s opening. The loans are accepted on a first-come, first-served basis and will be accepted until the end-2011, or until the available funds are used.
The programme drew a huge number of home buyers because of the two-year free interest. Based on GHB’s present minimum repayment rate of 6.75 percent, a customer borrowing 1.5 million baht (US$49,600) can save around 100,000 baht (US$3,300) on interest in the first year of instalments.
Finance Minister Korn Chatikavanij noted that the average loan application is 1.5 million baht (US$49,600). 60 percent of the applications came from outside Bangkok.
The government will not pay off the bank for any income loss from its two-year interest free condition, which is expected to reach between 450 million baht and 500 million baht (US$14.9 million to US$16.6 million).
Although the programme was more attractive to home buyers than the real estate tax incentives, which expired in 2010, the number of loan applicants under the latest programme on the first day was not as high as expected.
It is speculated that home buyers had less time to prepare the requirements, given that the cabinet had approved the programme less than a week before its launch.
Other reasons might include the condition that the loans are for first-time home buyers only and not for those who may use the programme for speculative purchasing.
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