Property developers to offer mortgages from 2010

Local property developers are expected to provide mortgage services next year after the Financial Institutions Act 2008 has permitted them to offer mortgage loans as long as they do not raise funds from the public.

The Secondary Mortgage Corporation will meet leading developers and three real estate associations in early 2010 to discuss the possibility, said SMC president Duangporn Arbhasil.The SMC mediates between financial institutions and investors to build liquidity in the mortgage loan market through issuing mortgage-backed securities.

In 2010, it plans to make a securitisation worth about 400 million to 500 million baht each for Kasikornbank and Kiatnakin Bank.

“Mortgage companies operated by property developers are likely next year if they are ready,” she said.

Currently, 44 property developers — 27 listed and 17 non-listed firms — meet criteria set by the SMC.

“The capacity and qualifications of the listed firms are not a cause for concern as all of them are in the stock market,” she said. “Concern is rather for non-listed firms, as we have to take into account their risks.”

The SMC’s criteria include registered capital of at least 300 million baht for SET-listed firms and 20 million baht for MAI-listed firms and non-listed firms.

The SMC will also consider financial strength, as it is essential for mortgage companies operated by developers to maintain sufficient funds for support.

Developers may build a secondary market through the SMC but they should have their own capital during an early stage.

Their shareholding structure, performance background and projects must also be elaborated. Housing units should also be priced between 500,000 baht and 10 million baht.

The 17 non-listed firms that have passed the criteria are guaranteed by three banks including the Government Housing Bank, Kasikornbank and Kiatnakin Bank, said Mrs Duangporn. All perform securitisation with SMC.

“We will give a guideline to developers that are interested in being mortgage companies. We will also act as the secondary market for them,” she said.

SOURCE: bangkok Post