Covid Mortgage Bomb Is Going To Explode

[Brierley]

Just now, rickudon said:

But how much do Thai banks make with their Mortgage interest rates? The interest rates on mortgages haven't changed in the 11 years i have been here, but savings interest rates have plummeted. In the UK mortgage interest rates are half that of Thailand's (with many more options).

Mortgage rates depend on the customer and their credit. Mortgage rates aren't fixed here, they are in a range. Poor credit worthy customers pay a high price, good quality credit worthiness customers pay a low price, the spread can be large. Next time you're in a bank look at their MLR/MRR/MOR (minimum Lending Rates) board, they are all MLR +x%

[digger70]

4 hours ago, Sydebolle said:

So it is real estate shopping time anytime soon again ......... and never forget, the bank can and will auction off foreclosures at the remaining balance of a loan. I take it that some good deals are snatched up by the wealthy few - as always ......... 

The Banks don't like losing money, they Foreclose but they don't have a Low Price tag on the Foreclosed houses . 

There are Many  buildings that are in need of a Lot of attention and have been Empty for years ,They have a Too High of a price tag on them .

They Can't sell them . They Will get stuck with them.

[Brierley]

1 minute ago, digger70 said:

The Banks don't like losing money, they Foreclose but they don't have a Low Price tag on the Foreclosed houses . 

There are Many  buildings that are in need of a Lot of attention and have been Empty for years ,They have a Too High of a price tag on them .

They Can't sell them . They Will get stuck with them.

Banks are not allowed to sell at a value that is less than the outstanding loan so they will sit on them until they achieve that value. Banks don't want to own property, they want people to make mortgage payments on those properties.

[Thomas J]

13 minutes ago, J Town said:

Look how the Costco model in the US operates. The CEO makes a good, fair amount as do the employees. Costco offers college tuition assistance, a GREAT health care package, and their stock rises every single year. It CAN be done, just reign back on the insane corporate greed. It can be done.

Greed  now what exactly is greed.  When someone starts a business and they want to make a profit that is greed.  But of course when you want government to tax the money away from those profitable corporations, somehow taking money that others made to use as you see fit is "not greedy"   Alternatively, if that business owner wants to maximize his/her profits in the business "that is greedy"  But you wanting them to sell you their products and services for less so you pay less "is not greedy"

Capitalism works on "self interest"  you call it greed.  People, companies always work towards what is in their "best" self interest.  If a company makes great profits it is because they are providing something that the public finds value in.  If they charge too much, others will come in to compete and the profits will go down.  Now if they are more efficient that is they can sell the same products/services but their costs are less than their competitors they will make more profit. That is because they are more efficient than their competitors.  That is a good thing not a bad thing. 

Companies will and should try to maximize their profits, consumers should always operate in their self interest and try to get the most product/service for the least amount of money.  Those competing forces is what drives competition and efficiency.  If I have a business and it is extremely profitable, I want to expand it.  If my profits are meager, I have no such interest in taking even more risk.  The expansion of business means a growing economy more jobs and guess what more taxes.  A barely profitable company pays little and very profitable company pays a lot.  

[BritManToo]

23 hours ago, Brewster67 said:

assuming the average rate of 7%

Current mortgage interest rate is 4.745%.

If you have a mortgage, why don't you know the interest rate?

Edited May 20, 2021 by BritManToo

[BritManToo]

3 hours ago, LittleBear57 said:

The bank too have some on our estate falling into disrepair with an artificial price tag. It's time they got their act together and sold realistically or auctioned of and cut their losses.

They are not legally allowed to sell for less than the outstanding mortgage loan.

They have no choice to sell cheaper.

Edited May 20, 2021 by BritManToo

[AlfHuy]

That's exactly what I am talking about.

 

Negative equity.

People borrowed up to their necks, hoping prices go up and up and up.

Now, many new, unsold building nearby at lower prices.

People can repay their mortgages whilst the prices are going down.

Banks see that what they hold on their books is going down in value and have given 100% mortgage.

 

or they ask that owner injects more cash or one day, bank will take over, which they do not want because nowhere to unload them.

 

Timebomb.

 

Sit tight and rent.

[BritManToo]

10 minutes ago, rickudon said:

But how much do Thai banks make with their Mortgage interest rates? The interest rates on mortgages haven't changed in the 11 years i have been here,

That's odd, because my mortgage interest rate has dropped around 4 times in the past 5 years.

I started paying 6.25% .......... and today it's at 4.745%.

[Brierley]

1 minute ago, BritManToo said:

That's odd, because my mortgage interest rate has dropped around 4 times in the past 5 years.

I started paying 6.25% .......... and today it's at 4.745%.

MMR is linked to the BOT rate, when that changes your mortgage will change, the part that doesn't change is the + in the MMR + part because that denotes your credit worthiness for the loan.

[AlfHuy]

9 minutes ago, Brierley said:

Banks are not allowed to sell at a value that is less than the outstanding loan so they will sit on them until they achieve that value. Banks don't want to own property, they want people to make mortgage payments on those properties.

Continue dreaming.

People were given mortgages on "forged" income papers.

100% mortgages on inflated porperty prices.

On top, loan for car etc.

 

Now, people lost their jobs and can't repay their loans. A mortgage holiday helps for a while but banks are not charities, they will add it and monthly repayments will rise.

Banks will soon learn that many customers are in negative equity.

 

They don't have just 1 problem but a couple of them.

 

First, they loan money to property developers, hoping that they sell quickly on ever rising prices.

They hope to get customers who buy some inflated properties and serve their loans.

Now, oversupply of properties but they continue to build/

Prices are coming down.

Developer not able to sell, prices further down.

Existing owners struggling to repay mortgage, prices falling and soon, people in negative equity.

 

Banks are in big trouble.

Property owner just walks away and hands the keys back.

[Thomas J]

6 minutes ago, BritManToo said:

They are not legally allowed to sell for less than the outstanding mortgage loan.

They have no choice to sell cheaper.

Is that true?  They can't sell for less than the loan value?  That is ridiculous.  The property may have fallen into disrepair since the time the loan was taken saying nothing about the market price of homes may have fallen.  Also, that ignores the carrying cost of the home.  In my village the banks are paying about 20,000 baht each year just for the community fees.  The have the loss of income on the money they would have had they sold the properties years ago, no management company fees, no maintenance and repair.   The truth is, the homes foreclosed years ago by the bank have so deteriorated that they may not even be salvageable. Walls decaying, windows broken letting animals in, mold etc. 

 

[Brierley]

Just now, AlfHuy said:

Continue dreaming.

People were given mortgages on "forged" income papers.

100% mortgages on inflated porperty prices.

On top, loan for car etc.

 

Now, people lost their jobs and can't repay their loans. A mortgage holiday helps for a while but banks are not charities, they will add it and monthly repayments will rise.

Banks will soon learn that many customers are in negative equity.

 

They don't have just 1 problem but a couple of them.

 

First, they loan money to property developers, hoping that they sell quickly on ever rising prices.

They hope to get customers who buy some inflated properties and serve their loans.

Now, oversupply of properties but they continue to build/

Prices are coming down.

Developer not able to sell, prices further down.

Existing owners struggling to repay mortgage, prices falling and soon, people in negative equity.

 

Banks are in big trouble.

Property owner just walks away and hands the keys back.

As poster Britman also said, it is the law that they can't sell under the book value of the loan.

[Susco]

8 minutes ago, BritManToo said:

They are not legally allowed to sell for less than the outstanding mortgage loan.

 

Of course they are allowed to sell at any price they consider right, but they don't do, because once sold at a lower price, they have to book the loss on the mortgage.

 

As long as not sold there is no loss, but rather an asset.

[J Town]

2 minutes ago, Thomas J said:

Greed  now what exactly is greed.  When someone starts a business and they want to make a profit that is greed.  But of course when you want government to tax the money away from those profitable corporations, somehow taking money that others made to use as you see fit is "not greedy"   Alternatively, if that business owner wants to maximize his/her profits in the business "that is greedy"  But you wanting them to sell you their products and services for less so you pay less "is not greedy"

Capitalism works on "self interest"  you call it greed.  People, companies always work towards what is in their "best" self interest.  If a company makes great profits it is because they are providing something that the public finds value in.  If they charge too much, others will come in to compete and the profits will go down.  Now if they are more efficient that is they can sell the same products/services but their costs are less than their competitors they will make more profit. That is because they are more efficient than their competitors.  That is a good thing not a bad thing. 

Companies will and should try to maximize their profits, consumers should always operate in their self interest and try to get the most product/service for the least amount of money.  Those competing forces is what drives competition and efficiency.  If I have a business and it is extremely profitable, I want to expand it.  If my profits are meager, I have no such interest in taking even more risk.  The expansion of business means a growing economy more jobs and guess what more taxes.  A barely profitable company pays little and very profitable company pays a lot.  

No. I said insane greed. In the 1960's and 1970's, the US economy was the greatest ever seen on the planet. Then corporate greed crept in, crippling the US economy and I don't think it will ever recover.

The history of the pay ratio between the workers and the executives.

- in 1965 - 20:1

- in 1982 - 42:1

- in 1992 - 201:1

- in 2002 - 281:1

- in 2012 - 354:1

It's only gotten worse over the last ten years.

American workers pay much more in taxes than do large corporations. Trying to defend corporations and their lobbyists who write tax laws that screw the rest of us is naïve at best. It can't continue this way.

https://www.tandfonline.com/doi/pdf/10.1080/1331677X.2013.11517646

[BritManToo]

Just now, Thomas J said:

They can't sell for less than the loan value?  That is ridiculous. 

It was a law passed a few years back to try and restrain Thai banks from handing out unrealistic loans.

(Many banks were giving 110% mortgages at the time)

It also makes the banks books look better (more financially secure), as they no longer have a loss on their hands, but an asset they are just waiting to sell.

Edited May 20, 2021 by BritManToo

[BritManToo]

Just now, AlfHuy said:

Continue dreaming.

People were given mortgages on "forged" income papers.

My misses was one of these people, never worked a legit job in her life.

Her and a pal conspired to fake her a wage of 25k/month to procure a 90% home loan.

It was really easy.

[Brierley]

The Loan to value rules (LTV) were changed in 2019, now it's quite easy to get a 90/100% mortgage on less than 10 mill. After two or three years the mortgage holder can apply for a second mortgage loan up to 80% of the equity in the LTV calculation, and after three further years they can apply for a third mortgage!

[CLW]

If you are concerned about house mortgages in TH, don't ever think about car and consumer loans.

[Ventenio]

Forget all your googling and "logic" and "common sense" you think you have...

 

This is how the world works!!!  In general, The rich get richer.  The poor are poor for a reason.

 

Things can be confusing much longer that you can possibly understand.

 

The Illuminati can send the Thai baht to, say 100/USD.  You will spew nonsense from 35 to 99......not understanding anything.  

 

same as Bitcoin...........at $5000 is was "the biggest bubble in the history of the planet!!!"

 

If you are the Illuminati, then I'll listen......  

 

[Thomas J]

13 minutes ago, BritManToo said:

t was a law passed a few years back to try and restrain Thai banks from handing out unrealistic loans.

(Many banks were giving 110% mortgages at the time)

It also makes the banks books look better (more financially secure), as they no longer have a loss on their hands, but an asset they are just waiting to sell.

Someone told me that they were not able to sell those homes for less than the loan value because they would have to recognize the loss at that time.   I know the same does not apply to cars since I bought a car that was repossessed. 

Now if you are correct, that is just plain stupid.  All that does is guarantee that banks will continue to hold on to non-performing properties, bear the expense of maintenance, let the properties continue to go into disrepair, and they lose the earnings on whatever money they could have got for those properties for all the years they hold on to them. 

 

[DerbyDan]

not sure how it works in thailand, but in the usa the missed payments and interest can be put on the back of the loan at some point.

 

you just resume regular payments. nobody pays off their property anyhow, they just trade up to a bigger loan (more leverage).

[AlfHuy]

31 minutes ago, Brierley said:

As poster Britman also said, it is the law that they can't sell under the book value of the loan.

Just wait.

 

I did a few purchases, well under book value, directly from banks. They tried to pass me on the over-inflated prices. no thanks. After a while, they accepted my offer.

Was in Europe.

[Thomas J]

35 minutes ago, J Town said:

t's only gotten worse over the last ten years.

American workers pay much more in taxes than do large corporations. Trying to defend corporations and their lobbyists who write tax laws that screw the rest of us is naïve at best. It can't continue this way.

CEO pay is a different story.  First off your statement that corporations pay any taxes is ludicrous.  They write the check, but you the consumer pay the bill.  Here in Thailand the VAT is 7%.  Do you write the check to the Thai government for that each time you make a purchase - No.  But do you pay it - Yes.  

A business operates on "cash flow"  its revenue minus its expenses.  Taxes, whether they are property taxes, excise taxes, income taxes, government assessments, fees, call it what you want, they are money taken from revenue.  All costs are passed on.  An income tax is no different than rent, salaries, utility bills, etc.  The company writes a check for it reducing its cash flow and it has to incorporate that "expense" as part of the cost of goods and services. 

Now as to your statement that the corporation pays less than one of its employees.  First off 47% of tax returns in the USA pay ZERO.  Second, you ignore the double taxation on corporate profits.  If I hypothetically own 100% of a companies stock, and the corporation pays 20% of its income in federal income taxes.  I am the one who pays that 20%.  If the company then distributes the remaining income to me in the form of a dividend, I get taxed on that again as personal income.  That principle is true whether I own 100% or 1% of the company. Qualifying dividends are taxed at a top rate of 20 percent, plus a 3.8 percent tax on net investment income. As a result,  the combined tax rate on the income would be 39.8 percent = 0.21 + (1-0.21) * 0.238. 

This idea that somehow you can tax companies and it costs nothing is just faulty thinking that you can someone pass the burden on to someone else.  Consumers always pay all of the taxes. 

Q.

Is corporate income double-taxed?

A.

C-corporations pay entity-level tax on their income, and their shareholders pay tax again when the income is distributed. But in practice, not all corporate income is taxed at the entity level, and many corporate shareholders are exempt from income tax.

Income earned by C-corporations (named after the relevant subchapter of the Internal Revenue Code) is subject to the corporate income tax at a 21 percent rate. This income may also be subject to a second layer of taxation at the individual shareholder level, whether on dividends or on capital gains from the sale of shares.

Suppose a corporation earns $1 million in profits this year and pays $210,000 in federal taxes. If the corporation distributes the remaining $790,000 to its shareholders as dividends, the distribution would be taxable to shareholders. Qualifying dividends are taxed at a top rate of 20 percent, plus a 3.8 percent tax on net investment income. As a result, if the shares were held by high-income individuals only $601,980 would be left, and the combined tax rate on the income would be 39.8 percent = 0.21 + (1-0.21) * 0.238. 

 

https://www.taxpolicycenter.org/briefing-book/corporate-income-double-taxed

Edited May 20, 2021 by Thomas J

[AlfHuy]

34 minutes ago, Susco said:

 

Of course they are allowed to sell at any price they consider right, but they don't do, because once sold at a lower price, they have to book the loss on the mortgage.

 

As long as not sold there is no loss, but rather an asset.

A depreciating asset.

[Brierley]

7 minutes ago, AlfHuy said:

Just wait.

 

I did a few purchases, well under book value, directly from banks. They tried to pass me on the over-inflated prices. no thanks. After a while, they accepted my offer.

Was in Europe.

I'm sure you think you did. I think however that it is highly unlikely that you or I would ever know what the true book value is of any outstanding bank loan, only the internal bean counters know such things. Just because the banks advertise something at a certain value, that doesn't mean that's the book value, they are allowed to advertise at a much higher price, which is almost certainly what happened in your case.

Edited May 20, 2021 by Brierley

[AlfHuy]

Just now, Brierley said:

I'm sure you think you did. I think however that it is highly unlikely that you or I would ever know what the true book value is of any outstanding bank loan, only the internal bean counters know such things.

Well I did.

 

I knew the ex-owner of the property. Know for how much he purchased the house, how much the mortgage was, how much he repaid, how much was outstanding, how much, similar propertied close by are and how much bank was hoping to get out of it.

They took over the property because ex owner divorced and could not cover the mortgage fee.

I negotiated with the banks and they ask well above market value and outstanding loan.

 

I walked away and 3 months later, I got it a the price I offered. Banks were having lots of properties on their books.

 

I did the same with building land.

Believe it or not, I do not care.

Due diligence, that's the game.

[scubascuba3]

4 hours ago, Brierley said:

If they are hidden, how do you know?

Because i read it on here

[Brierley]

2 minutes ago, scubascuba3 said:

Because i read it on here

Why didn't you say so, it must be true in that case. ????

[scubascuba3]

1 hour ago, Brierley said:

Banks are not allowed to sell at a value that is less than the outstanding loan so they will sit on them until they achieve that value.

Is this a real fact or made up fact? people keep repeating but if you could provide a decent link it would be good

[xylophone]

1 hour ago, Brierley said:

Banks are not allowed to sell at a value that is less than the outstanding loan so they will sit on them until they achieve that value. Banks don't want to own property, they want people to make mortgage payments on those properties.

And therein lies the biggest problem IMO, because the property deteriorates over time, although the land won't, but it still won't be worth anywhere near what they want for it, although there is the possibility that if the LVR meant that the buyer had to put a good percentage of their own money into it, before they borrowed from the bank, then the value of it will be based on the loan amount, so there is some hope.

 

Some hope, but in the cases I have seen, very little, because the deterioration has been such that the property is virtually unsaleable.

 

Of course the bank could always keep these properties on its books ad infinitum, so future generations could cop the backlash, but it's just a case of "kicking the can down the road".