Finance Minister Apisak Tantivorawong wants state-owned banks to maintain the lowest possible rates to alleviate the consumer burden. (Bangkok Post photo)

As commercial banks' introductory rates for mortgages start to creep up, Finance Minister Apisak Tantivorawong has assured that state-owned banks will maintain the lowest possible rates to alleviate the consumer burden.

State-run banks will keep mortgages cheap to comply with the government's policy of encouraging people to own their own homes, Mr Apisak said.

"It is our policy to let state-owned banks charge the lowest rate possible," he said. "They have independence in management, but it's the government's policy for people, particularly low-income earners, to have their own homes now. Otherwise, such chance would be more difficult if our country manages to become high-income nation like Japan, where most people cannot afford to buy homes due to their expensive prices. Right now, our real estate is not so expensive and people are able to borrow for housing and service the debt."

His remarks came after Siam Commercial Bank, the country's biggest mortgage lender, raised its introductory rate on housing loans by five basis points in keeping with the bank's policy to widen housing loan margins.

Although the central bank's Monetary Policy Committee held the policy rate at a near-record low this week, market rates for fixed-term loans such as auto hire purchase and teaser rates for mortgages are inching up as banks bet that a policy rate hike is just around the corner.

Mr Apisak said rates can either be raised or cut, depending on the financial liquidity of the market.

"Commercial banks' interest rates depend on money that they want to use and their fund-raising ability in the future," he said. "If they need to mobilise a large amount of deposits, they must raise the savings rate. They also need to increase lending rates if that's the case. It depends on the necessity of each bank, which also connects with the liquidity in the financial market. If liquidity in the market is high, there is no need to raise interest rates."

People should borrow from mortgage lenders that offer lower rates, he said, adding that GH Bank is an option if commercial bank rates are too steep.

Mr Apisak in April instructed state-run banks to keep their interest rates unchanged throughout 2018 to foster more broad-based economic growth.

Seven specialised financial institutions last year reached the initial conclusion that they would delay raising interest rates for as long as possible to shield debtors from shouldering an additional financial burden.

The seven are GH Bank, Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives, the Small and Medium Enterprise Development Bank of Thailand, the Islamic Bank of Thailand, the Export-Import Bank of Thailand and Thai Credit Guarantee Corporation.