Government Savings Bank wants to offer special mortgages to address borrowers' pain points. (Photo by Patipat Janthong)

Measures by Government Savings Bank (GSB) to ease mortgage requirements are scheduled to seek board approval on June 18 to comply with the government's policy to help homebuyers better access financial sources in the wake of the central bank's tighter regulations.

The three measures consist of mortgages for those who deposit a particular amount for a certain period as required by the state-owned bank; mortgages for those who make down payments on a monthly basis for a specific period to property developers that have projects financed by the bank's loans; and mortgages for state officials and private-sector employees based on their salary increments over the course of three years.

The mortgages based on borrowers' pay rises over the next three years will have a 3% rate for private-sector workers and 5% rate for state officials, said president and chief executive Chatchai Payuhanaveechai.

If future salary is applied when considering a borrower's debt-servicing ability, there is a greater likelihood for prospective borrowers to tap home loans, he said.

The measures are aimed at directly addressing prospective mortgage borrowers' pain points, Mr Chatchai said, adding that the bank doesn't need the Bank of Thailand's approval for the new measures.

The government, as part of its latest economic stimulus package, plans to use GSB and GH Bank -- another state-controlled lender -- as tools to assist those who want to own their own home, particularly low-income earners, after the central bank imposed tougher loan-to-value (LTV) limits to improve credit standards and tame speculative and buy-to-let activity.

Homebuyers, starting from April 1, are required to make a minimum down payment for third and subsequent mortgages of 30% of the home price, with second mortgages set at 10-20%, depending on how long a borrower has made payments on the first one.

The LTV ratio of 90-100% remains unchanged for those who apply for a first mortgage to buy a home priced below 10 million baht, but the ratio is lowered to 80% when the borrower buys a residence valued at 10 million baht or higher.

GSB aims for 15-20 billion baht worth of housing loans to be extended under the easing measures, Mr Chatchai said.

He expects GSB's rejection rate for mortgages to fall from 30%-40% at present after the relaxed criteria are in place.

The bank's housing loans outstanding amount to 350 billion baht.

In another development, Mr Chatchai said GSB is focusing on small and medium-sized enterprises (SMEs) this year in accordance with government policy.

The bank's customers can be classified into three groups -- retail customers, grassroots and state welfare recipients, and business and state customers -- and each group accounts for 33% of the bank's lending portfolio.

Although as much as 82% of the bank's financial transactions were made through electronic channels at the end of March, the bank is maintaining its 1,065 physical branches nationwide, but some branches need to be revamped into social branches to take care of low-income earners, Mr Chatchai said.

Certain branches can be centres to solve loan shark problems and promote tourism and job training, he said.

The bank is on track to have 8 million mobile banking users this year, targeting 16 million in 2020.

Users of MyMo, GSB's mobile banking app, numbered 5.5 million at the end of March.

The bank reported a net profit of 6.04 billion baht for the three months to March.

Net profit stood at 30.8 billion baht in 2018, compared with 31.2 billion in 2017, 25.9 billion in 2016 and 22.7 billion in 2015.

GSB's ratio of non-performing loans climbed to 2.83% of loans outstanding at the end of March from 2.81% at the end of 2018.