Thailand trapped in a household debt quagmire

[Damrongsak]

11 hours ago, webfact said:

Bt14.35 trillion ($434.8 billion)

That works out to roughly 208,000 Baht per person or 645,000 Baht per household.

[BusyB]

7 hours ago, kickstart said:

 

 

 

 

 

 

• Debt as a percentage of GDP is expected to fall from 83.5% of GDP in 2022/23 to 79.8% in 2026/27.
• You are right they ,the above from the BBC after yesterday's UK Spring Statement,
• And I would say with inflation as it is  ,the problem will get worse, not better .
• The sooner they put interest up the better ,with inflation at 7% the money in my bank earning 0.5%,my savings are being eroded away . 

Inflation is cool for debt - just depends on the currency ...

[Hans Johnson]

Thai household debt comes from people biting off more than they can chew. They insist on buying every thing new and the top of the range to look good. New houses, cars, the latest phones /technology and have more than one credit card. On line shopping has created extra financial strain also. 

[Airalee]

4 hours ago, BusyB said:

Inflation is cool for debt - just depends on the currency ...

Not always.

 

Here, everybody who has a mortgage has a variable rate.  There are no 30 year fixed rate mortgages as there are in the US.  Their mortgage is the largest chunk of the personal debt.  With inflation, as interest rates rise (the banks always win) the mortgage payment can increase substantially.  If incomes don’t rise in a commensurate manner, the borrower is certainly not better off.

 

For government debt, sure.  They can just raise taxes to cover it…..leaving people with even less money to pay for their mortgages.

[hotchilli]

On 3/24/2022 at 9:09 AM, webfact said:

Most Thai households have been bogged down by high debt even before COVID-19 struck in early 2020.  For many years, the average Thai worker has been struggling to make ends meet, forcing dependence on borrowings.

Most Thais I know are up to their eyes in debt.. 

[BritManToo]

3 hours ago, Airalee said:

With inflation, as interest rates rise (the banks always win) the mortgage payment can increase substantially.  If incomes don’t rise in a commensurate manner, the borrower is certainly not better off.

Disagree,

The banks can't raise the interest rates beyond their customers ability to pay.

This is true for the prices of any product on sale.

 

When pork went up, we stopped eating it, same as all the locals.

Now the price has gone down, we're thinking of buying it again.

[Airalee]

13 minutes ago, BritManToo said:

Disagree,

The banks can't raise the interest rates beyond their customers ability to pay.

This is true for the prices of any product on sale.

 

When pork went up, we stopped eating it, same as all the locals.

Now the price has gone down, we're thinking of buying it again.

I’m not talking about people buying homes but those who already have them.  The banks will raise the interest rates and if the people can’t pay, the banks will foreclose.  It works out great for the banks as mortgage interest is front end loaded so after 10 years or so, more money is going towards principal. That helps out the debtor more than the bank.  When the bank repossess and then resells the home, the cycle starts again.  The price of the home may come down but the bank will make it up with higher interest rates.

 

Lather, rinse, repeat.

 

The bank always wins.

[BritManToo]

26 minutes ago, Airalee said:

I’m not talking about people buying homes but those who already have them.  The banks will raise the interest rates and if the people can’t pay, the banks will foreclose.

You're wrong,

MANY foreclosed properties are no use to the bank.

The value of the homes drops because there are no buyers that can afford to buy.

[Grecian]

On 3/24/2022 at 3:33 AM, CrunchWrapSupreme said:

Due to their meager salaries, most Thais consider any loans or credit they can get as part of their entitled income. I know teachers certainly feel this way. Their salaries are only about 10-12k baht. Yet they always have the latest iPhones, drive Ford Fortuners, and show off their new house constructions on Facebook. All through govt backed loans.

 

They've got it good as the terms of these loans are quite lax, long terms with small monthly payments, few penalities. Other Thais can't help but see this and want similar lifestyles, but can't get those loans, so they turn to those terrible consumer debt shops on every corner, loan sharks, and gambling.

I heard these government loans were 6.9% when inflation was 1%

Doesn't sound like a good deal to me.

[fondue zoo]

On 3/24/2022 at 4:19 PM, Will B Good said:

Sounds very glib, but as food is never in short supply (famous last words) and the only shelter you need can be very rudimentary....... Thais will never rise up.

Funny you should say that, I recall being told by an old educated "uncle", that while a bowl of somtam is cheap and it doesn't snow nothing will change in Thailand.

[BusyB]

5 hours ago, Airalee said:

Not always.

 

Here, everybody who has a mortgage has a variable rate.  There are no 30 year fixed rate mortgages as there are in the US.  Their mortgage is the largest chunk of the personal debt.  With inflation, as interest rates rise (the banks always win) the mortgage payment can increase substantially.  If incomes don’t rise in a commensurate manner, the borrower is certainly not better off.

 

For government debt, sure.  They can just raise taxes to cover it…..leaving people with even less money to pay for their mortgages.

Oh I know, I know, friends of mine are struggling with it  ... like I said depends on the currency ... and also has a lot to do with national or personal debt.

I've noticed that the series of major market crashes since the tech crash in around 2000 all began after the US Fed started hiking rates - to be followed by immediate climbdowns right back to zero.

Be interesting to see what happens this time round ...

 

[Airalee]

3 hours ago, BritManToo said:

You're wrong,

MANY foreclosed properties are no use to the bank.

The value of the homes drops because there are no buyers that can afford to buy.

You’re not making any sense within the original context of my first post.

 

Many times here on the forum, you have stated that as the BOT cut interest rates, your mortgage payment fell.  When the BOT raises rates, what will happen to your mortgage payment?

[Danderman123]

Do these figures include gambling debts?