[Special Scoop] High mortgage rejection rates carried over into the second half of last year with the number rising by 30-50 per cent from 2015. This has prompted developers to come up with various solutions to address the growing problem.
Supalai PCL. points out that the rejection rate will remain high this year as banks will continue to tighten their lending rules. “Consumers with no fixed income and SMEs who were affected by the economic slowdown are the most rejected applicants, while the high rejection rate is also the result of high household debts,” says the developer. The company has counteracted the issue by providing comprehensive advice to their customers before they apply for a loan. Supalai also carefully selects potential groups whose profiles are in accordance with banks’ criteria.
Meanwhile, other developers solve the problem by pre-approving customers’ financial statements. This prevents the company from losing an opportunity when the bank decides to reject a potential applicant. Some companies encourage their customers to reimburse the down payment first to minimise the loan size when they apply later as this can improve approval chances. Nevertheless, most consumers do not have a large amount of cash required for the significant down payment. In order to circumvent this, Sansiri has decided to focus on the high-end segment where buyers are less likely to have their mortgage applications rejected.
According to data collected by DDproperty, mortgage rejection rates vary among each developer’s customer base. The rates range from 6 per cent and 25 per cent. Supalai’s customers have the lowest rate of rejection, while Sansiri, Lalin Property, M.K. Real Estate Development and Pruksa all have a rejection rate between 20-25 per cent. One of the factors that could lower the mortgage rejection rate is the fact more loans are being paid off from the first-car buyer scheme. Without this financial burden, consumers will have more purchasing power for property, according to banks. So far, low-price housing has been the most affected segment by the mortgage restrictions and this trend is likely to carry on this year.
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