The Bank of Thailand today announced a “preventive measure”, by setting the loan to value (LTV) limit for condominium and housing purchases.
Thailand’s property and stock markets run a risk of facing a bubble burst if foreign capital continues flowing into Asia in large amounts because many countries in the region remain under inflationary pressure, according to a leading economist.
The loan to value ratio for low-rise housing price will be capped at 95 per cent, starting from January 1, 2012.
For condominium units costing less than Bt10 million, the LTV is capped at 90 per cent. It will be applied to purchase contracts.
For low-rise properties, the cap on LTV is 95 per cent. It will be applied to purchase contracts dated January 1, 2012 onwards and will not be retroactive.
The Financial Institutions Policy Committee is of the opinion that the BOT should cap the LTV ratio, with consideration of impacts on all parties like buyers, developers and commercial banks. This preventive action will mitigate future risks.
The problem might get out of hand if we wait until there is a clear sign of risks or when problems emerges,” Bank of Thailand Deputy Governor Krirk Vanikkul