Display mode (Doesn't show in master page preview)

21 Feb 2025

Financial Institutions

LTV measures may be relaxed to help stimulate the real estate sector (Current Issue No.3562 Full Ed.)

คะแนนเฉลี่ย
•    In a joint discussion between the Bank of Thailand and operators in the real estate and construction sectors, one of the proposals raised was the relaxation of loan-to-value (LTV) regulations governing mortgage lending, or LTV measures, for second and third home purchases to help stimulate the residential market.

•    Looking back at two key periods when LTV measures were relaxed, in 2009 and 2021, KResearch found that the effects on mortgage lending within the Thai banking system differed in each case. Following the easing of LTV rules in 2009, housing loans in the banking system rebounded sharply. In contrast, after the LTV relaxation in 2021, although outstanding housing loans continued to decline, the easing of LTV measures helped support a gradual recovery of new mortgage lending.

•    KResearch views that relaxing the LTV rules may help boost new lending, particularly among prospective middle- to upper-income borrowers where financial institutions can manage credit risks. However, the overall impact on housing loans may remain limited. It is projected that housing loans in the Thai banking system will expand by 0.5 percent in 2025 (under the baseline scenario where LTV measures remain unchanged) compared to the 0.3 percent recorded in 2024. Close attention must be paid to further details of the LTV measures, as they will affect mortgage applications for purchases of second and third homes, as well as residential properties priced above THB 10 million, which together account for approximately 10 percent of the market. If the proportion of borrowers in this segment increases by 1 percent of the overall market, it could potentially boost housing loan growth by around 0.1–0.2 percent from the baseline.

View full article


Financial Institutions

Loan