The Bank of Thailand has relaxed LTV regulations to support real estate, allowing 100% loans for homes under 10 million baht from the second loan, effective May 2025 to June 2026.
Bank of Thailand’s LTV Regulation Relaxation
The Bank of Thailand has announced a temporary easing of Loan-to-Value (LTV) regulations to bolster the struggling real estate sector. The new guidelines allow for a maximum LTV ratio of 100% for housing loans on properties valued under 10 million baht starting from the second loan. For properties valued at 10 million baht or more, this applies from the first loan. This measure is effective for agreements made between May 1, 2025, and June 30, 2026.
Impact on Housing Market
SCB EIC views this temporary LTV relaxation as a way to improve financial conditions amid a sluggish housing market. While it may help stimulate short-term demand for properties priced below 10 million baht, the overall impact on boosting housing sales is expected to be limited. The measure targets investors and those looking to purchase second homes, focusing on buyers ready and financially capable of securing loans.
Further Government Initiatives Needed
The housing market recovery still faces challenges, particularly for middle- to lower-income buyers who are grappling with limited credit access. Proposed measures, such as extending reduced transfer and mortgage registration fees for affordable homes, could further support the market. Additionally, the government is encouraged to explore initiatives like tax incentives for second-hand home purchases and increased loan amounts for lower-income groups to facilitate better credit access as housing prices rise.
The Bank of Thailand aims to stimulate housing demand and provide greater financial flexibility for buyers amidst economic uncertainties. By relaxing the Loan-to-Value (LTV) regulations, the central bank seeks to encourage investment in the real estate market, which has faced declining activity in recent years. Analysts predict this move could lead to increased competition among lenders, potentially resulting in more attractive loan packages for borrowers. However, critics caution that such measures must be carefully monitored to avoid overheating the property market or encouraging excessive borrowing. As the implementation period approaches, stakeholders in the housing sector are expected to adapt their strategies to align with the new regulatory framework.
