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First-home buyers flock to interest-free loan offer

Almost 5,900 people have lodged applications for special loans worth a combined 8.88 billion baht at the Government Housing Bank in the first day of the loan launch yesterday.

Prospective home owners queued at the National Housing Bank head office yesterday to apply for loans for first time buyers. Loans will be interest free for two years. The bank is making available 25 billion baht for the loan scheme. Sirilak Suanburi, the first person to file a loan application, shows the documentation. THITI WANNAMONTHA

The programme, with a total credit line of 25 billion baht, targets first-time homebuyers. GH Bank accepts applications on a first-come, first-served basis.

About 200 people queued to apply for loans before the bank opened for business at 8.30am.

At the top of the queue was a 47-year-old man who arrived at the bank at 4am. He had travelled from Buri Ram on Sunday night to apply for the loan. GH Bank started handing out queue cards for loan applicants at 7am.

The programme offers first-time homebuyers a mortgage loan at zero interest rate for the first two years for houses priced below three million baht with a full term of 30 years. The rate for subsequent years will be based on the bank's conditions.

The bank will also pay the 1% mortgage fee and 2% transfer fee for customers.

Applications will be accepted until the end of the year or until the credit line is used up.

The programme attracted a large number of homebuyers because of the two-year waiver of interest. A customer borrowing 1.5 million baht can save about 100,000 baht on the interest in the first year of instalments based on GHB's present minimum repayment rate of 6.75 %.

Finance Minister Korn Chatikavanij said an average loan application is 1.5 million baht. Sixty percent of applications came from outside Bangkok. Initial approval may take up to three weeks and all applications are expected to be approved within two months by the bank.

Mr Korn said GH Bank must operate this programme transparently for all people on a first-come, first-served basis. Applicants to the programme must be buyers themselves. The programme is aimed at helping low-and-medium income-earners in light of rising interest rates and the cost of living.

The government will not compensate the bank for any income loss from its two-year interest free policy, which is estimated at 450 million to 500 million baht.

Although the programme was better and more attractive for homebuyers than the property tax incentives which expired last year, the number of homebuyers applying for loans under the programme on the first day was not as high as expected. It is speculated home buyers had limited time to prepare documents given that the cabinet had approved the programme less than a week before its launch.

Other reasons for the lower than expected number of applicants might include the condition that the loans are for first-time home buyers only and not for other people who may exploit the programme for speculative buying.

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