Thai household debt skyrockets, predatory lending mushrooms

[mrfill]

In recent years, the Banks have been pushing people to have credit cards .............. just as happened in the UK a long time back. Credit cards encourage overspending and difficulties with repayments...........mega interest for the Banks and misery for the card holders in hock up to their necks. Basically, a sign that the economy is not going well.

The 'mega-interest' on these credit cards were an outrageous 30-40%. However, now in the UK we have 'pay day loan' companies who lend short term. One such - fully legal and registered company - is Wonga. Representative interest rate is (wait for it....) 5853% - no mistake with missing decimal points either.

If 40% interest is a sign of an economy not doing well. imagine the state of the economy when rates in excess of 5000% are allowed by fully legit loan companies.

[samjaidee]

"BANGKOK, June 26 – Thai household debt rose to a record five year high at 64 per cent – a 12 per cent increase from last year, according to an academic survey."

64% of what? Anyone know?

[bangon04]

i lived in issan for a while..the green bank..bac.had truck loads of people getting loans..every day..i just could not believe it..

hard cash 200 300 400 hundred thousand to some people who can never pay it back..

it seems they treat it like free money...they never think of tomorow so it dont matter to them...live for to day only..

and thats the problem with thais

And this is exactly why you have to keep your ears to the ground to snatch up amazing land and home deals. The Thais BURY themselves in debt, be it from the bank or loan sharks, and often will sell what they have at insanely low prices just to break even. Amazing deals are everywhere when you have dumb and desperate people.

So if you want to get control of a farmer's land without paying the market price - give him a ridiculous loan that he cannot possibly pay, and take his land as collateral. Sound familiar?

[i claudius]

So what will this do to the Thai baht when the chickens come home to roost?

[rbrooks]

So I'm in Mr Tongs in Udon Thani and a 28ish year old Thai young woman starts talking to me at the bar. Later we walk out to parking lot to leave and she gets in a new Nissan quad cab pickup truck with big tires and lift kit. A really expensive truck. She said you like my truck? I was expecting her to grab a taxi. I really am wondering where all the money is coming from for all this stuff

Farlang with big money and lonely heart.

[ginjag]

Before people get into serious debt, they have to face this. Thai Farmer Bank, to open an account 500 bht, to be issued with an ATM card 800 bht, charge at an ATM out of the district 10 /15 bht, to close an account at a leading bank, if in another district--cannot--you have to travel to the original bank to do it. Interest near 0%. AMAZING !!!

after this you pay big interest on any loans, easy just take in your deeds and you have secured a loan for a house deposit or car. Motor bike is easy, pay a deposit say 999 bht and your away with the bike same day.

If it's easy to get money Thai will get it first then --Mai pen rai.

[vijer]

The meltdown that came to the USA 10 years ago is on its way here.

A Thai bank had a big section of Central Chon Buri full of displays of available houses. A lot of this stuff was over 6m baht and looked like shiet, I couldn't see any property attached to the houses that would make them that valuable. I wonder how the Thai banks are going to deal with all the condo/apartments that are going to default in the coming years.

[PaullyW]

"Mushroom"..must be the English word of the month in the Thai press, havent we already had mushrooms this week in the "Thai ladies selling used knickers on line" news story ?

"Hub" must be so past tense now and the new buzz word is "mushroom"

But I must admit...the concept of predatory mushrooms scares the h*ll out me, see what happens when man genetically modifys food ?....what's next bi-polar apples ? narcissistic bannana's ?

I'll warn the wife so she keeps her wits about her when she's in the mushroom sheds picking tomorrow morning.....

[Mosha]

Just who's policies started this easy money?

[Sing_Sling]

Just who's policies started this easy money?

Banks - it's what they do

[GAS]

 

The meltdown that came to the USA 10 years ago is on its way here.

A Thai bank had a big section of Central Chon Buri full of displays of available houses. A lot of this stuff was over 6m baht and looked like shiet, I couldn't see any property attached to the houses that would make them that valuable. I wonder how the Thai banks are going to deal with all the condo/apartments that are going to default in the coming years.

 

I am also wondering what will happen to all these properties when they can't be flipped. The RE bubble can not go on much longer, prices do not pencil now and have not for some time compared to rents.

[maximillian]

predatory lending mushrooms

I tried to picture a predatory mushroom in my mind's eye. Scary stuff indeed.

You should seemy toe nail fungus...

[paddyjenkins]

My sister in law has a 60 year mortgage and a 2 year old daughter. Great future she set up for her

Is it really the case thatb 60 years mortgages have been on offer by the banks in Thailand? If so then that has to be a global first,it is the first I have heard anywhere in the world of such long dated debt. I believe 50 year mortgages had been made available elsewheere, but 60 is a first. Can anyone out there confirm?

[AnotherOneAmerican]

My sister in law has a 60 year mortgage and a 2 year old daughter. Great future she set up for her

Is it really the case thatb 60 years mortgages have been on offer by the banks in Thailand? If so then that has to be a global first,it is the first I have heard anywhere in the world of such long dated debt. I believe 50 year mortgages had been made available elsewheere, but 60 is a first. Can anyone out there confirm?

As I already posted maximum 45 years.

Can't get a home loan until age 20.

Can't have a home loan after age 65.

[kristophon]

what!?!... you mean you have to pay the money back....?

[gemini81]

My sister in law has a 60 year mortgage and a 2 year old daughter. Great future she set up for her

Is it really the case thatb 60 years mortgages have been on offer by the banks in Thailand? If so then that has to be a global first,it is the first I have heard anywhere in the world of such long dated debt. I believe 50 year mortgages had been made available elsewheere, but 60 is a first. Can anyone out there confirm?

As I already posted maximum 45 years.

Can't get a home loan until age 20.

Can't have a home loan after age 65.

Yeah. Mortgages at a maximum of 30 years in Thailand. You cannot exceed age 60. Example: if you're 30 or under, yes you can get a 30 year mortgage. If you're 40, you could get a 20 year home loan. That's for Thailand; I don't know the latest scoop abroad anymore.

[Bagwan]

In recent years, the Banks have been pushing people to have credit cards .............. just as happened in the UK a long time back. Credit cards encourage overspending and difficulties with repayments...........mega interest for the Banks and misery for the card holders in hock up to their necks. Basically, a sign that the economy is not going well.

Ah! The credit card feeding frenzy. I maxed out three cards and after the six months interest free period was up I took out another 3 cards and transferred the balances thus getting more interest free months. I invested the money in Japanese stocks, the Asian boom was in full flood, and I made a killing. When I could no longer get new credit cards I sold enough of my stock holdings to settle my debts and cancelled all the cards. All the dosh and stocks were held by the Trustee department of a major bank who brokered deals. The profits were not touched for 5 years, so no tax was payable. Anybody with an ounce of common sense could have done the same.

Edited June 27, 2013 by Bagwan

[metisdead]

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[paddyjenkins]

what!?!... you mean you have to pay the money back....?

I seriously doubt most Thais are intellectually able to understand the concepts of percentages or the terms and conditions they are agreeing to.

That is quite apart from there being little concept of responsibility, paying back debt, thinking about the future etc. Anyone remember Courts the furniture chain?

They have done well in Singapore for example, but failed in Thailand because their buying on credit model failed when people just didn't pay the

money back, maybe because that is just the way in Thailand, maybe becasue they thought of Courts as a "falang" business, maybe both.

[pistachios]

In recent years, the Banks have been pushing people to have credit cards .............. just as happened in the UK a long time back. Credit cards encourage overspending and difficulties with repayments...........mega interest for the Banks and misery for the card holders in hock up to their necks. Basically, a sign that the economy is not going well.

Ah! The credit card feeding frenzy. I maxed out three cards and after the six months interest free period was up I took out another 3 cards and transferred the balances thus getting more interest free months. I invested the money in Japanese stocks, the Asian boom was in full flood, and I made a killing. When I could no longer get new credit cards I sold enough of my stock holdings to settle my debts and cancelled all the cards. All the dosh and stocks were held by the Trustee department of a major bank who brokered deals. The profits were not touched for 5 years, so no tax was payable. Anybody with an ounce of common sense could have done the same.

Maxing out credit cards to gamble on a very volatile and risky market? Anybody with an ounce of common sense would know it's the stupidiest thing to do

You were extremely lucky it turned out ok but even fail to realize that.

[Asiantravel]

The article says “ the average household debt is Bt188,774.54 with a monthly repayment requirement of Bt11,671.93.”.

I am wondering if anyone has seen any comparisons with other countries such as India or China regarding the ratio of household debt to their average monthly income?

[paddyjenkins]

In recent years, the Banks have been pushing people to have credit cards .............. just as happened in the UK a long time back. Credit cards encourage overspending and difficulties with repayments...........mega interest for the Banks and misery for the card holders in hock up to their necks. Basically, a sign that the economy is not going well.

Ah! The credit card feeding frenzy. I maxed out three cards and after the six months interest free period was up I took out another 3 cards and transferred the balances thus getting more interest free months. I invested the money in Japanese stocks, the Asian boom was in full flood, and I made a killing. When I could no longer get new credit cards I sold enough of my stock holdings to settle my debts and cancelled all the cards. All the dosh and stocks were held by the Trustee department of a major bank who brokered deals. The profits were not touched for 5 years, so no tax was payable. Anybody with an ounce of common sense could have done the same.

Maxing out credit cards to gamble on a very volatile and risky market? Anybody with an ounce of common sense would know it's the stupidiest thing to do

You were extremely lucky it turned out ok but even fail to realize that.

I knew someonwe in the UK who did the same thing. They guy was an idiot but thoughtb he was smart for some reason. Anyway, he maxed out his cards, mortgaged his house and also used money due to the inland revenue, all for day trading. He lost it all, ended up in a whole load of trouble. he lost his home and is still paying the tax man back after more than a decade. But then again, he could have been lucky...instead he ended up in debt hell.

[SICHONSTEVE]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

Of course they are assets. They can change into liabilities though very quickly!!!

[Asiantravel]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

Of course they are assets. They can change into liabilities though very quickly!!!

Well according to accounting definitions, a car can only be classified as an asset if its current value is greater than what you owe on it .

how many instances of that happening are they likely to be in Thailand?especially when you consider you can lose up to 20% in value the moment you drive it from the showroom

Edited June 27, 2013 by Asiantravel

[TallGuyJohninBKK]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

No mention of debts for gambling or drinking.... Perhaps the academics don't think to factor those in for the Thai populace...

[SICHONSTEVE]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

No mention of debts for gambling or drinking.... Perhaps the academics don't think to factor those in for the Thai populace...

They don't do that sort of thing in Thailand - it's illegal!!!

[Sing_Sling]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

No mention of debts for gambling or drinking.... Perhaps the academics don't think to factor those in for the Thai populace...

Haven't you heard, these are the fault of the current government as well . . . well, they must be . . . for some inexplicable reason

[SICHONSTEVE]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

Of course they are assets. They can change into liabilities though very quickly!!!

Well according to accounting definitions, a car can only be classified as an asset if its current value is greater than what you owe on it .

how many instances of that happening are they likely to be in Thailand?especially when you consider you can lose up to 20% in value the moment you drive it from the showroom

Actually, cars in Thailand hold their value extremely well.

If you were referring to driving a brand new car off of the showroom forecourt in England then I couldn't agree more with you more!!

[Asiantravel]

" buying property and assets such as houses and cars "

they will learn in the not too distant future that it is highly debatable to refer to cars as “ assets “

Of course they are assets. They can change into liabilities though very quickly!!!

Well according to accounting definitions, a car can only be classified as an asset if its current value is greater than what you owe on it .

how many instances of that happening are they likely to be in Thailand?especially when you consider you can lose up to 20% in value the moment you drive it from the showroom

Actually, cars in Thailand hold their value extremely well.

If you were referring to driving a brand new car off of the showroom forecourt in England then I couldn't agree more with you more!!

Yes, but there hasn't been a crisis yet ?

what is going to be like when they cant pay their car loans anymore ?

[Thai at Heart]

The judgement day is coming!!!

Agree. You only have to look at what the easy access credit did to the Western world to see how damaging this is, (and using loan sharks is really scary) Trying to lift or maintain economic growth by encouraging loans for domestic consumption will only fall over, it simply has no where else to go. It seems most of Asia is in a rush to be "wealthy" like the West. Hankering for the latest gadget or car or whatever when you don't have the readies is dangerous when credit is available to even the most uncredit worthy. It's all false and will cause massive issues in even the medium term.

What?

The banks in the west just mimicked perfectly the Asian crisis and got bailed out for the privilege.

Crony capitalism became sub prime mortgage.

Sound e so much better than crap lending.