Average Thai household debt reaches 160,000 baht

[webfact]

Average Thai household debt reaches 160,000 baht

BANGKOK, 27 Nov 2013 (NNT) – The National Statistical Office (NSO) has revealed that the average household debt has risen significantly.

According to a recent NSO survey on social and economic situation of Thai households during the first 6 months of this year, 54.4% of the households were indebted. The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht.

Other household debts are related to agriculture and businesses. The survey also says that 91.6% of the debts are done within the formal banking system, 3.8% have deals with both legal and illegal creditors, and 4.6% rely on illegal money lending services. It also indicates that the average household debt made through traditional loan sources is 156,356 baht, which is 50 times higher than that made through illegal lenders.

However when looking at household expenses in each part of the country, the survey shows households in Bangkok and its vicinity have the highest average income of 44,129 baht, with 33,095 baht of average expense, or 75% of the income. The average household debt in these area is at 283,560 baht.

The northeastern region holds the highest expense-to-income ratio at 79.1%, causing households in the zone to have the least savings and the least debt clearing ability. Holding the least expense to income ratio is the households from in the northern region, which stands at 72%.

-- NNT 2013-11-27

[Ragzilb]

Bad circle to get into.

[Ricardo]

'All Thais will be rich within six months', unfortunately it will all be on-credit, and you'll have to pay interest too !

Oh, and the government will have mortgaged you & your childrens' future, for the next 50 years, as well !

Yay for Red Finance !

[Thai at Heart]

According to a recent NSO survey on social and economic situation of Thai households during the first 6 months of this year, 54.4% of the households were indebted. The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht.

So is that 54% of houses have an average debt of 159k or ALL household debts accounted for 159k? When you consider how many cars are on loan at considerably more than 159k, and the huge amount of houses that have taken on mortgages recently, I would say that I am absolutely astounded that it isn't more. 159k? Barely makes the loan on a micro-car.

[LarryBird]

159k seems quite low. If it's accurate, they're doing quite well.

[Card]

According to a recent NSO survey on social and economic situation of Thai households during the first 6 months of this year, 54.4% of the households were indebted. The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht.

So is that 54% of houses have an average debt of 159k or ALL household debts accounted for 159k? When you consider how many cars are on loan at considerably more than 159k, and the huge amount of houses that have taken on mortgages recently, I would say that I am absolutely astounded that it isn't more. 159k? Barely makes the loan on a micro-car.

It is the average - most people in thailand don't have a vehicle or their own home and it includes them as well as those who do. That makes the debt of those who do much higher than 159000.

[losworld]

Probably based per person and may include five years olds, grandmothers, etc. who have no debt or little debt. I have to believe it is higher with all the car purchases from the ridiculous tax free program.

[Thai at Heart]

According to a recent NSO survey on social and economic situation of Thai households during the first 6 months of this year, 54.4% of the households were indebted. The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht.

So is that 54% of houses have an average debt of 159k or ALL household debts accounted for 159k? When you consider how many cars are on loan at considerably more than 159k, and the huge amount of houses that have taken on mortgages recently, I would say that I am absolutely astounded that it isn't more. 159k? Barely makes the loan on a micro-car.

It is the average - most people in thailand don't have a vehicle or their own home and it includes them as well as those who do. That makes the debt of those who do much higher than 159000.

Well, what a ridiculous way to show a statistic. It's all very well on the average to measure it this way, but it doens't help when the absolute average number can be so skewed. That said, this is a combination of many types of debt, and the value of those in debt who have a house mortgage, would obviously be significantly higher than 159k. So all in all, a very odd set of figures, since cars and houses being the two most dangerous types of debt. If it is 160k on half, then it is 320k for those houses in debt. This is akin to the debt on one medium car on average. Hardly horrendous.

Are they really telling us that the vast majority of people living in new moobhans in the last 5 years paid cash? Or would it be better to assume that only about 15% of the people in the whole country actually have a mortgage on property? I find that very hard ot believe. If it wasn't the case, the figure for indebtedness would be much higher. A basic bungalow costs 1.5 mn, and the basic mortgage would be about 1mn minimum, so how is the average figure so low? Is private house ownership and mortgages really that low? I don't think so.

My mate in the city is busy servicing an 850k GBP mortgage. Now you want to see some rough finger nails.....

[h90]

According to a recent NSO survey on social and economic situation of Thai households during the first 6 months of this year, 54.4% of the households were indebted. The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht.

So is that 54% of houses have an average debt of 159k or ALL household debts accounted for 159k? When you consider how many cars are on loan at considerably more than 159k, and the huge amount of houses that have taken on mortgages recently, I would say that I am absolutely astounded that it isn't more. 159k? Barely makes the loan on a micro-car.

It is the average - most people in thailand don't have a vehicle or their own home and it includes them as well as those who do. That makes the debt of those who do much higher than 159000.

I actually don't know a single Thai who has no vehicle, even small children have a bicycle.

[ramrod711]

The northeastern region holds the highest expense-to-income ratio at 79.1%, causing households in the zone to have the least savings and the least debt clearing ability. Holding the least expense to income ratio is the households from in the northern region, which stands at 72%.

This is precisely why the corrupt rice pledging scheme is such a crime. Find a way to help these low income people, cut out the middle man and you will see voters that vote on principle, not for cash.

[CPH]

UK household debt in 2012 was 54000 pound. So Thai debt seem minimal compared.

[DrTuner]

This would be the emerging middle class, right ? One of the hallmarks is being in debt up to your eyeballs.

[Balance]

Use of the "average" statistic is useless if you want to gain any understanding. That is because neither income or indebtedness are no where near a normal distribution. Much more usefull would be to use a median or modal measure. Also, remember that this was a self report survey and most likely lacks any controls for people lying.

[MJP]

Put in perspective . . . .

Latest figures from the Bank of England suggest that personal borrowing, including mortgages and unsecured loans, is now at £1.43 trillion.

http://www.bbc.co.uk/news/business-25108891

[Robby nz]

What would be really telling is :

What was it 2 years ago.

Then couple that with the national debt using the same comparison.

Plus what was the countries overseas Dollar reserves 2 years ago compared to today.

Combining all the above would give a real indication of where the country is heading.

[akampa]

MJP, on 27 Nov 2013 - 17:37, said:

Put in perspective . . . .

QuoteQuoteLatest figures from the Bank of England suggest that personal borrowing, including mortgages and unsecured loans, is now at £1.43 trillion.

http://www.bbc.co.uk/news/business-25108891

CPH, on 27 Nov 2013 - 16:46, said:Quote

UK household debt in 2012 was 54000 pound. So Thai debt seem minimal compared.

I don`t know how you can compare England and Thailand, on average the British worker earns in excess of 33,000 GBP(1.5millon Baht) per year, and an average Thai yearly wage 465,000 Baht, most likely a lot less it`s like comparing apples and oranges.

[recycler]

There are lies, bigger lies and statistics.

I don't believe these figures are accurate by anywhere near.

[wooloomooloo]

I don't believe these figures are accurate by anywhere near.

Me too. Must be much higher than 160k.

[waza]

"The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht."

These are basic needs debts, food, housing and education and they are 10 times their annual income. The root cause of this is inflation.......

" The northeastern region holds the highest expense-to-income ratio at 79.1%, causing households in the zone to have the least savings and the least debt clearing ability."

Expect a mass of redshirt bankruptcies ........

[jdinasia]

There are lies, bigger lies and statistics.

I don't believe these figures are accurate by anywhere near.

In what way do you think they are wrong?

Better yet, what do you think the "average Thai household" income is, and what percentage of a debt load does said average household have?

[jdinasia]

"The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht."

These are basic needs debts, food, housing and education and they are 10 times their annual income. The root cause of this is inflation.......

" The northeastern region holds the highest expense-to-income ratio at 79.1%, causing households in the zone to have the least savings and the least debt clearing ability."

Expect a mass of redshirt bankruptcies ........

"10 times their annual income?" ------You may wish to rethink that (and please remember you are discussing an "average household"

[yooper2001]

Do you think that maybe letting 1,000,000 new first time car owners has something to do with this? I still do not understand how they can sell a car and the monthly payment is more then then a person makes a month. This is Thai fuzzy math

[Thainy Tim]

According to a recent NSO survey on social and economic situation of Thai households during the first 6 months of this year, 54.4% of the households were indebted. The survey says that housing loans, daily purchase of commodity products and education expenses accounted for the majority of the household debts currently averaging at 159,492 baht.

So is that 54% of houses have an average debt of 159k or ALL household debts accounted for 159k? When you consider how many cars are on loan at considerably more than 159k, and the huge amount of houses that have taken on mortgages recently, I would say that I am absolutely astounded that it isn't more. 159k? Barely makes the loan on a micro-car.

It is the average - most people in thailand don't have a vehicle or their own home and it includes them as well as those who do. That makes the debt of those who do much higher than 159000.

Well, what a ridiculous way to show a statistic. It's all very well on the average to measure it this way, but it doens't help when the absolute average number can be so skewed. That said, this is a combination of many types of debt, and the value of those in debt who have a house mortgage, would obviously be significantly higher than 159k. So all in all, a very odd set of figures, since cars and houses being the two most dangerous types of debt. If it is 160k on half, then it is 320k for those houses in debt. This is akin to the debt on one medium car on average. Hardly horrendous.

Are they really telling us that the vast majority of people living in new moobhans in the last 5 years paid cash? Or would it be better to assume that only about 15% of the people in the whole country actually have a mortgage on property? I find that very hard ot believe. If it wasn't the case, the figure for indebtedness would be much higher. A basic bungalow costs 1.5 mn, and the basic mortgage would be about 1mn minimum, so how is the average figure so low? Is private house ownership and mortgages really that low? I don't think so.

My mate in the city is busy servicing an 850k GBP mortgage. Now you want to see some rough finger nails.....

No it is not ridiculous. It is just your own lack of economic knowledge.

Everything in the OP is crystal clear to those who understand BASIC economics.

Let's say that there are a total of 20 million households in Thailand. Each has B159K of domestic debt applied to it. Now a lot may have no debt, so lets say that 40% hold this debt burden, then it is much more than the 159K.

In the countryside, one old beat up pickup can be used for 4 households and not have a shiny new car in the drive, and someone assuming that every Thai house owns a brand new car has only been in Thailand 2 weeks of has not been 1 KM from where they live..... EVER!

This is a huge debt, and interesting to see that Northeastern Thailand is the highest..... Thaksin country.

The main thing you have to consider is that all this debt is what is propping up the economy in Thailand. Once the debt bubble bursts, a lot of Thailand is going to be in severe poverty. They will ALL default and banks will go bust left, right and center.

Thailand is living on borrowed time. It is exactly the same in China and they are crapping themselves over it while Thailand is blissfully ignorant because the government are taking the credit for all this wealth that is all false. When China's bubble bursts, Thailand will follow within 2 weeks.

I wouldn't be surprised if the Democrats have to clear all the mess up.

[yooper2001]

If 1 month ago you bought a condo for 3 million bhat at 30 bhat to 1 USD it cost you S100,000 USD

Now it is 32 bhat to the USD so you lost $6250.00 USD in 1 month your condo is worth $93750.00

This happened in USA and I have a very bad feeling for Thailand. My nepher bought a $375,000 home in florida for $84,000 3 years ago. I saw many people walk away from their home because they owed more on their house than it was worth.

[winstonc]

it was a survey and presuming they wernt liying..face face face..even to a stranger..seriously i would think more like double.but i guess no-one really knows.they are probably right about the north east.the rice that broke the camels back.. there is a lot of car showrooms i dont mean new cars either..well they were once.back to the moped somchai

[stickylies]

most thai people i know don't know how interest works... i've explained it to numerous "puan" that a 40000TB wave will cost them 55000. they look at me like i'm einstein...

[Thainy Tim]

If 1 month ago you bought a condo for 3 million bhat at 30 bhat to 1 USD it cost you S100,000 USD

Now it is 32 bhat to the USD so you lost $6250.00 USD in 1 month your condo is worth $93750.00

This happened in USA and I have a very bad feeling for Thailand. My nepher bought a $375,000 home in florida for $84,000 3 years ago. I saw many people walk away from their home because they owed more on their house than it was worth.

Exactly correct.

That was all part of the US sub-prime mortgage scam that caught out a lot of the western banks who were all throwing their own savers money into it and anyone could buy a house and get a mortgage if they had a job for more than 3 months.

Then the bubble burst, the yanks walked away and threw the keys at the mortgage lenders which spelled the end for the likes of Fannie May and Freddie Mac the two most rampant lenders who file for bankruptcy on the same day which basically halved the property market prices in a month. May I add that both these organizations were US government sponsored, which is why the US taxpayer was forced to bail out the institutions.

The exact same thing is happening now and I would say we were less than a year at worst and 2 years at best from an almighty collapse.

But the Thais will not learn from the mistakes of the west. My wife regularly gets phone calls from our banks offering loans etc... We don't need any loans, but they still ask.

I just shake my head and smile, because there is nothing else I can do.

[siampolee]

Thainy Tim in his post # 23 makes a very good point concerning the financial fallout that is certainly on the horizon and is not due in any way to the current events it is a long standing rolling tsunami of debt that is going to hit Thailand in the very near future.

And yes in my opinion wholeheartedly agree with Thainy Tim this particular government are not going to be around to clear up the mess they'll have taken their ill gotten gains and run.

the figures are skewed and the debt burden is falling on those in the North East who are least able to absorb that burden due to banks not being in a position to fulfill their obligations to pay for rice etc.

The writing is on the wall and hard times are coming I fear.

Thank goodness the greater majority of my income( 90%) unlike the wife's business income (luckily she is not indebted to any bank just slow paying customers ) is from outside of Thailand.

Been through it before so I am sure we will survive

[planr]

Probably based per person and may include five years olds, grandmothers, etc. who have no debt or little debt. I have to believe it is higher with all the car purchases from the ridiculous tax free program.

Based on households, not individuals, as every other commenter noticed...

Use of the "average" statistic is useless if you want to gain any understanding. That is because neither income or indebtedness are no where near a normal distribution. Much more usefull would be to use a median or modal measure. Also, remember that this was a self report survey and most likely lacks any controls for people lying.

Agreed. Unfortunately the NSO has never provided median data in previous Household Socio-Economic Surveys, and it looks like 2013 will be no different.

What would be really telling is :

What was it 2 years ago.

Then couple that with the national debt using the same comparison.

Plus what was the countries overseas Dollar reserves 2 years ago compared to today.

Combining all the above would give a real indication of where the country is heading.

In 2011 when the last survey was carried out, it was 134,900 THB, so average debt levels have increased by 8.7% per year.

So far the NSO has only published a summary, so the full data which would allow a direct comparison to GDP and national debt (do you mean public/government debt?) is not possible (yet). I don't recall off the top of my head, but I believe that in 2011, household debt was higher than public debt by a fair margin.

In terms of foreign reserves, comparing Oct 2011 to Oct 2013, reserves are a bit lower (USD 172 billion versus USD 182 billion two years ago) according to Bank of Thailand stats.

[Thainy Tim]

it was a survey and presuming they wernt liying..face face face..even to a stranger..seriously i would think more like double.but i guess no-one really knows.they are probably right about the north east.the rice that broke the camels back.. there is a lot of car showrooms i dont mean new cars either..well they were once.back to the moped somchai

Here is a little clarification and you can see that the defaulting is already happening.

Surging automobile sales in 2012, courtesy of a first car tax rebate, has been a significant contributor to the recent increase in Thai households’ debt. The World Bank estimates that the tax breaks cost Thailand’s government $2.5 billion, but simply pulled automobile demand forward only to subsequently plunge when the tax break expired and over 100,000 indebted consumers defaulted on their auto loan payments. The chart of Thai automobile registrations shows a spike in recent years:

Debt grew at an alarming 13.6 percent per year since 2008, bringing the country’s household debt to GDP ratio to 77 percent from 55 percent, which is up radically from just 45 percent a decade ago. Total lending to Thai households increased at a 17%annual rate from 2010 to 2012, while household credit provided by credit card, leasing and personal loan companies rose at a blistering 27 percent annual rate.

Thailand now has one of the highest household debt-to-GDP ratios in Asia:

Bank of Thailand recently published a report that showed that the debt-service ratio (DSR) of indebted Thai households has increased from 30 percent in 2011 to 34 percent in 2013. To make matters worse, indebted Thai households that earn less than 10,000 baht per month are burdened by a debt-service ratio that is nearly twice as high at 62 percent. Bank of Canada estimates that debt-service ratios above 40 percent place households in financial jeopardy. Thai households’ high debt loads will limit future consumer spending and economic growth.

If I was to add all the wasted money from the populist policies over the past 3 years, it would show that this government don't have a clue on what they are doing, and they are just leading Thailand into the dark ages.