Loan rejections soar for Thai homes under 3 million baht

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The Thai housing market is facing a significant challenge as a growing number of loan applications for homes priced below 3 million baht are being rejected.

 

According to the Housing Finance Association, the rejection rate has spiked to 50%, highlighting the vulnerability of this segment despite its substantial market size.

 

The association’s secretary-general and chairman of the executive board, Alangkot Boonmasuk, pointed out that several factors contribute to this situation. The high household debt level, which stands above 90% of the country’s GDP, coupled with declining incomes and rising living costs, have all weakened the purchasing power for residential properties.

Furthermore, the increase in non-performing loans (NPLs) has led financial institutions to adopt stricter lending criteria, resulting in half of the loan applications being denied.

Specifically, the market for homes under the 3 million baht threshold is of considerable size in the real estate sector, yet it is also a fragile group facing significant financial hurdles. Alangkot mentioned that the association is currently in discussions with financial institutions to compile their views and find appropriate measures that align with the current economic conditions. They aim to understand the reasons behind the high rejection rates and the lending frameworks of different banks to enable financial institutions to better support the real estate business.

 

While banks also have targets for issuing new loans, they express a desire to support citizens in owning homes through loan mechanisms. However, they face numerous challenges that contribute to the high rejection rates. It’s not just new homes that are affected; the second-hand market for homes under 3 million baht is also experiencing difficulties with loan approvals, reported KhaoSod.

 

The association is actively seeking solutions to this issue, which is crucial for maintaining the health of the property sector and the wider economy. The high rate of loan rejections not only impacts potential homebuyers but also reverberates through the construction industry and other related sectors.

 

by Nattapong Westwood

Photo courtesy of condonayoo

 

Source: The Thaiger 2024-03-05

 

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[freeworld]

Good opportunity for all condo developers to charge not less than 3 million baht for any of their condo units.

[john donson]

I would prefer to own a townhouse, instead of a shoebox, sadly still not possible in 2024 or ever...

[hotchilli]

So a property crash is looming?

Loans under 3 million are being rejected at almost 50% 

Developers won't drop the sale prices, so only the rich can buy?

Trouble is the middle class is now in the lower class and can't afford the price either, as they're already up to their necks in debt to keep the red plate car, and kids in school.

 

[kingstonkid]

2 hours ago, freeworld said:

Good opportunity for all condo developers to charge not less than 3 million baht for any of their condo units.

You do realize that if people can not afford a 2mil mortgage they will not qualify for 3 mil.

 

Looking at the construction I can tell you occupation of 5 mil is slowing

[spidermike007]

The association’s secretary-general and chairman of the executive board, Alangkot Boonmasuk, pointed out that several factors contribute to this situation. The high household debt level, which stands above 90% of the country’s GDP, coupled with declining incomes and rising living costs, have all weakened the purchasing power for residential properties.

 

I am confused. The administration keeps reporting on how good the economy is. How strong the nation is. How things are looking up. How an economic correction is NOT coming. So, which is it? Up or down? Why on earth would I distrust the government over reality?

[rwill]

There's only one solution.  Build more!!!

[cncltd1973]

isn't this an admission that the wealth disparity will continue to widen and the middle class will fold into the lower class? seems the bank is betting the economic recovery is for the upper class only

[digger70]

Loan rejections soar for Thai homes under 3 million baht. 

 

Sounds pretty fair to me  If the bank thinks that you don't Earn enough to pay back a Loan Why should they give you a loan what they later have to default on. 

Nothing new about that ,they maybe have been giving loans before that where borderline cases  and now they  clamping down on that.

 

[Ben Zioner]

As long as repayment is seen as optional by the Thais they will be facing problems. 

[scorecard]

5 hours ago, rwill said:

There's only one solution.  Build more!!!

... and increase the price.

[NorthernRyland]

Makes sense. How much more debt can Thailand can take on? GDP quadrupled in the last 20 years who knows how much of that was debt. Household debt is 90% of GDP so they're reaching the limit already.

[Misty]

Demographics are not favorable for residential property demand.

 

[ozz1]

What i dont get is they will lend money out on a new 2 million baht car that they cannot afford and cars depreciat houses not so much

[Will B Good]

4 minutes ago, ozz1 said:

What i dont get is they will lend money out on a new 2 million baht car that they cannot afford and cars depreciat houses not so much

I think the banks know Thai men would happily become homeless/live in a shed before defaulting on their car payments and lose their car......555