Thailand is likely to see the key interest rate fall further to 1% this year after the Monetary Policy Committee cut it by 0.75 percentage point to 2% on Wednesday, according to Khan Prachuabmoh, president of the Government Housing Bank (GH Bank).

He said the Bank of Thailand would reduce the interest rate again within the first quarter of this year in light of more signs of a global slowdown from overseas.

Taking its cue from the central bank, GH Bank would soon consider cutting its rates.

"Since I've been in the banking sector for 30 years, I've never seen such a low rate," said Mr Khan. "We need to consider our cost of funds and try to reduce the rates as much as possible."

GH Bank targeted to release new housing loans worth 73.5 billion baht this year.

"Measures to stimulate the property market have not yet been finalised but we're preparing to support them," he said.

"We're also waiting for confirmation from the cabinet on mortgage insurance initiated a long time ago," he added.

"Many people have fixed incomes but no savings, for example, new workers. Mortgage insurance will help them buy a house sooner. They don't need to resort to expensive quick loans."

Mr Khan said the government should try to encourage financial institutions to offer attractive interest for housing loans. Based on the key interest rate at 1%, GH's mortgage rates would be higher than 4%.

GH Bank yesterday signed an agreement with Habitat for Humanity Thailand to support mortgage loans of 200 million baht for 2,300 low-income earners nationwide - 180 million baht for 1,500 people needing to build new houses and 20 million baht for 800 people seeking to renovate.

Interest rates would be 2% below minimum retail rate (MRR-2%) in the first three years and MRR-0.50% afterwards. Currently, the bank's MRR was at 7%.

source : www.bangkokpost.com