he Bank of Thailand has announced the criteria to supervise housing loans by adjusting certain details in the Consultation Paper and postponed the effective date to April 1, next year (from the initial schedule of January 2019). The new requirement will not cover purchase and sale contracts or down payments made prior to October 15, 2018, to provide some time for all parties to adjust to the new measures. The exemption should ease the pressure on the property market and housing loans approved by financial institutions and cushion any effects on prospective buyers or those who have already made down payments.
Moreover, the central bank has adjusted the ratio of loan-to-value (LTV) by including top-up loans, or a facility on top of the existing loan based on the same collateral, in the LTV calculation to reflect the overall loan risks and reduce the impact from uncertainty in the collateral value. However, exemptions are granted to certain top-up loan products such as life insurance, non-life insurance and SME loans; whereas, these waivers are considered more lenient than what was proposed in the Consultation Paper.
KResearch views that the Bank of Thailand's macro-prudential measures to govern the housing loan market are designed to enhance economic stability in the long term. The more relaxed requirements (when compared to the proposals in the Consultation Paper) will encourage property developers to spend the remaining period of almost five months, before the new measures become effective, carrying out their marketing campaigns to prompt consumers' buying decisions, boosting purchase transactions before April next year. Regarding the outlook of the property market, KResearch forecasts that the ownership transfers and housing loans approved by commercial banks will continue to accelerate until the first quarter of 2019; whereas, the property and housing loan activities in the remainder of next year will depend on the economic direction, consumers' purchasing power and the competition among the property developers amid an uptrend of the financial costs.