Thailand’s central bank is considering relaxing mortgage loan regulations to help stimulate the property market in 2020. Last April the central bank tightened mortgage regulations in order to reduce property speculation.
In 2019 first time mortgages continued to rise overall (although at lower levels than previous years) while second home mortgages saw a sharp decrease. However many property market experts have pointed out that the stricter loan to value (LTV) regulations will have a strong impact on overall sales when combined with other market factors; the strength of the Thai baht in 2019 reduced foreign property investment and impacted certain sectors of the Thai economy. Global economic uncertainty surrounding the US/China trade war has further reduced investment sentiment. In addition the Bank of Thailand now expects economic growth to slow further in 2020.
These factors combined with lobbying from real estate groups have led the central bank to consider relaxing the existing LTV regulations regarding mortgages in order to help stimulate sales. The current LTV ratio of 90-100% for purchasing homes under 10,000,000 THB is unlikely to change. Starting from April second home buyers will need to make a minimum down payment of 10-20%; while third or subsequent mortgages will require a minimum 30% down payment. One of the main complaints against these regulations is that they will impact first time buyers who have already co-signed another property where they were not the actual buyer. The central bank is still considering what changes to implement but it is likely relief will be given to these co-signatories.
“The issue is justified. The central bank is considering it and expects to make a decision soon,” said Ronadol Numnonda, deputy governor for financial institutions stability of the Bank of Thailand stated in the Bangkok Post. More announcements are expected to be made in February and we will keep you updated with the latest news as it progresses.