Housing loan business in 2011 is expected to slow in line with a decelerating real estate market as seen in lesser trading activities. Although the market may be boosted by higher homebuyer incomes adding greater purchasing power toward the purchase of fixed assets, housing sales may be affected by many negative factors, such as rising oil prices and higher construction costs resulting in higher housing unit prices. Meanwhile, consumer purchasing power toward housing is inhibited by other factors due to an upward policy rate trend that normally also accelerates housing loan rates. This affects consumers applying for housing loans at financial institutions as seen from their lower purchasing power and capacity to access to loans.
However, KResearch views that the competition in the housing loan business in 2011 will intensify. Although negative factors may affect homebuying, financial institutions will continue to expand mortgage business via a variety of marketing strategies, e.g., price strategies implemented by large commercial banks. Although many financial institutions will try to avoid such strategies, pricing will be an important factor toward buying decisions, particularly amid rising interest rates, given concern toward the higher expenses and the installment payments. As a result, some customers may turn to use loan service at financial institutions that offer lower interest rates to reduce their installments. Meanwhile, some financial institutions may expand their loan business by penetrating to new corporate customer segment and their existing corporate customers, as well as joining hands with developers to launch marketing campaigns.
KResearch views that the overall outstanding balance on housing loans in 2011 will likely be around THB2,014,350-2,033,215 million, growing 7.5-8.5 percent YoY. Thus, growth may decelerate from the 9.8-percent growth achieved in 2010. (These figures are also based on the forecasts of housing loan outstanding balance of life insurance companies.)