The Bank of Thailand is now less concerned about a bubble in the condominium market due to a reduction in oversupply and a slowdown in demand. The impact of its decision to raise the loan-to-value (LTV) ratio, which took effect from the beginning of 2011, is being monitored.
It is too soon to assess the impact of the new LTV ratio but oversupply is much less, easing concerns of a bubble, said BOT senior director Mathee Supapongse.
Last year, the central bank announced a preventive measure by raising the LTV for condominium purchases. For condominium units costing less than Bt10 million, the LTV is capped at 90 per cent, which means loan cannot be more than 90 per cent of unit cost.
The property market has started to give better signal, reflecting lower demand, said BOT director Songtum Pinto. The number of residential units getting credit approvals from commercial banks is projected to decline for all types to 5,793 in January from 9,067 units a month ago, the BOT’s Economic Conditions Report in January said.
Thai Credit Guarantee Corporation (TCG) Will Launch Bad Debt Guarantee Program for SMEs
The program will also cover SME loans that have turned into non-performing loans (NPLs), defined as loans overdue by more than 90 days, although these NPLs must not exceed two years of overdue payment.
BANGKOK (NNT) – State-owned Thai Credit Guarantee Corporation (TCG) is preparing to launch a 20-billion-baht bad debt guarantee program to assist struggling small and medium-sized enterprises (SMEs) saddled with bad debts.
Can the Subscription Economy Save Financial Services?
Going back to the pre-Covid “normal” is not an option for financial services. Fortunately, the rise of the subscription economy points towards frontiers of untapped growth for the sector.
As the world waits for mass vaccination to revive economic activity, general malaise has overtaken the financial services industry (FSI). And things will probably worsen before they get better: US banks are expected to suffer US$318 billion in net loan losses by the end of 2022, according to Deloitte.
Asia Pacific Banks shrug off commercial property risks for now
APAC commercial property prices were down around 3% on average in 2020, after a 1% rise in 2019. But the coronavirus-induced decline has been modest compared to past downturns, suggesting that the impact on banks’ commercial real estate loans will generally be much smaller this time.
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