Thailand’s household debt has steadily increased to 78.6% of the country’s gross domestic products (GDP), or Bt12.8 trillion in the fourth quarter of last year, according to figures from the National Economic and Social Development Council.

A study by the Bank of Thailand reports that Thais get into debt in their 20s and tend to borrow more as they age and the level of their debt is maintained even as they approach retirement.

Speaking at the Bangkok Sustainable Banking Forum 2019 today, Veerathai Santiprabhob, Governor of the Bank of Thailand highlighted several aspects of the potential role of the financial sector in addressing common challenges facing the Thai society, such as income inequality, environmental degradation, excessive household debt, and the persistent problem of corruption.

Thais have more personal debt, as the median average debt obligation for each person doubles from Bt70,000 in 2010 to Bt150,000 in 2016, the Bank of Thailand reported, moreover, almost 16%, or 3 million Thais, have debt payments which are 90-days overdue.

Over the past few years, heightened competition in the real estate sector along with rising property prices, had led to aggressive sales and promotional campaigns by property developers, attracting real as well as speculative buyers. Seeing opportunities in the sector, some banks significantly relaxed their lending standards for mortgage loans, noted Mr Santiprabhob.

Data revealed that as high as 25 percent of new mortgage and related loans originated in 2018 had loan-to-value ratio above 100 percent. Moreover, numbers of homebuyers were getting mortgage credit lines in amounts much higher than the underlying property purchasing values, essentially gaining the extra “cash-back” from their borrowing activities.

Veerathai Santiprabhob, Governor of the Bank of Thailand

This created perverse incentives for individuals to buy homes merely to earn the cash-back, for use on general spending. These increasingly laxed mortgage lending standards by banks have in part worsened the household debt situation in Thailand.

householddebt asia

The Bank of Thailand has recently introduced macro-prudential measures to mandate that financial institutions assess each borrower’s ability to repay a loan based on a prudent debt-service ratio.

When financial institutions focus mainly on short-term gains, neglecting the potential long-term effects or negative spillover of their activities, this can in fact increase financial institutions’ risks; risks that can impair their credibility, public trust, and financial positions in the long-run.


But without better credit culture and internal controls, it will be difficult for the Thai financial institutions to limit the worsening of household debt : trapped in a debt cycle, indebted household often don’t have sufficient financial literacy or spending discipline.

About the author

Bangkok Correspondent at Siam News Network

Bangkok Correspondent for Siam News Network. Editor at Thailand Business News

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Fintech sector boosts inclusion and liquidity in emerging markets

Driven by a decline in cash payments during the Covid-19 pandemic, digital payments skyrocketed in line with the growth in e-commerce, as the financial technology (fintech) sector expanded to provide consumers with a wider variety of payment options.

BoT to explore yuan-baht settlement for Thai-Chinese trade

According to an ADB report, the majority of the significant Southeast Asian emerging markets’ outstanding foreign debt securities have been denominated in dollars for the past few years.