Bangkok--21 Dec--Fitch Ratings
Fitch Ratings (Thailand) Limited has released a special report titled, 'Thai Residential Mortgage Market'. The report provides an overview of the Thai residential mortgage market in terms of products, loan growth, interest rates charged, mortgage enforcement procedures; also included is a summary of Government Housing Bank's (GHB) operation and loan portfolio.
After taking a severe hit during the financial crisis in 1997, the Thai mortgage market started to recover in 2000. The robust growth seen during 2003 and 2004 was supported by the recovery of both the economy and property sector, as well as a low interest rate environment. New originations of housing loans, since 2003, have surpassed the pre-crisis level, although the mortgage market has slowed down somewhat since mid-2005.
"The slower housing loan growth over the past two years was a result of increased rates (during mid-2005 to 2006), persistently high oil prices and political instability which affected consumer confidence and the domestic economy. The slowdown in loan growth was also witnessed in other consumer finance sectors including credit card and auto loan receivables," noted Orawan Karoonkornsakul, Senior Director in Fitch Thailand's Structured Finance Team.
In terms of loan origination, heightened competition has seen loan-to-value ratio (LTV) rise to 80%-90% for Bangkok, compared with 70%-80% prior to 2000. In general, LTV for the provinces is lower than it is for Bangkok. GHB commands the largest market share among all players - about 40% as of H107, although this is likely to fall due to intensified competition from commercial banks. GHB's market share rose from about 30% following the country's financial crisis in 1997, which severely affected the private banking system. Thailand's total outstanding housing loans reached THB1.4 trillion at end-June 2007.
The Thai Residential Mortgage Market report also discusses the development of the local residential property market, which includes property ownership, demographics, economic development, household debts, the housing market and property prices. Fitch's rating process and general residential mortgage-backed securities (RMBS) rating methodology are also included in the report.
The copy of full report is available on Fitch Ratings web site at 'www.fitchratings.com'.
Contact: Napachak Phasukavanich, Orawan Karoonkornsakul, Vincent Milton, Bangkok, +662 655 4755; Stan Ho Hong Kong, +852 2263 9668.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215.
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tha)' for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
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