The mortgage sector, both pre- and post-finance, will likely change significantly following the flood crisis as banks re-adjust their debt-approval criteria.
Project location, appraisal prices and home insurance will all be scrutinised more closely.
For property developers, criteria covering debt-to-equity (D/E) ratios and presales will be tightened for project financing.
Piya Sosothikul, executive director of the Seacon Group, said banks will require a higher presales ratio for pre-financing.
Generally, banks set the ratio at about 20% of each residential project, and this could increase to 30% after the flood crisis. Before the crisis, banks did not need the proportion from good customers.
D/E ratio is another key factor for pre-financing of projects. But large developers, most of them SET-listed companies, have no problem with the financial data due to a low D/E level of no more than 1.5 times each.
However, banks will pay more attention to the ratio, mainly for small developers, said Mr Piya.
"Location and project potential will still be the key factors in pre-financing approval. Banks will be more concerned about submerged areas with long-term problems, and this will affect financing approval for projects," he added.
Separately, Chatchai Payuhanaveechai, secretary-general of the Housing Finance Association and an executive vice-president of Kasikornbank, said location has normally been the main factor in property projects, corresponding positively to the cost estimate and in turn affecting banks' credit-line approvals.
Developers have favoured areas outside Bangkok proper, especially Pathum Thani and Nonthaburi provinces. However, with these areas largely submerged during the recent deluge, developers may now want to invest in additional infrastructure that can guard against inundations.
"Inner Bangkok's non-flood zones such as the Srinakarin, Bang Na and Rama IX areas will become more popular, leading to higher residential prices," he said.
Conversely, appraisal values in flooded areas will decline by 10-20% this year.
Credit-line approval in submerged areas will also decline from 80-90% of the current home price.
Developers may also call for a higher down payment than the present 10-20%.
Demand for residences in flood-free areas upcountry will spike as well. Pattaya, Hua Hin, Nakhon Ratchasima, Phuket, Chiang Mai, Hat Yai and Khon Kaen have all gained in popularity as areas for second homes.
Developers have also started increasing investment in these locations.
Details of Bangkok's new city plan that took effect yesterday, governing population and residence density and higher valuation of land banks, is cited as another main reason for diversifying upcountry, said Mr Chatchai.
He also listed mortgage insurance as another area to be considered.
The Office of the Insurance Commission requires banks to offer two options for fire insurance with mortgages.
The first choice is fire insurance alone, while the other is fire and five other types of coverage _ floods, storms, earthquakes, hailstones and rioting/terrorism _ known as a 1+5 policy. Which policy is selected is up to the homebuyer.
"Homebuyers pay 279 baht a year more on average for the 1+5 policy. Fire insurance generally goes for 0.05% per million baht of the collateral price per year.
For example, if a house is priced at one million baht, then the fire insurance premium will be 500 baht a year and the 1+5 policy 779 baht," said Mr Chatchai.
He predicts the recent floods will result in mortgage sector growth of only 6% in 2012, a 10-year low. This year's growth rate for the consumer finance sector is now forecast at 7% to 7.5%, down from an earlier projection of 8% to 8.5% due mainly to the flood crisis.
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