Bank Lending Rates

[Jowels]

The missus is seriously considering buying a new home. She'll be able to pay approx 50% up-front, but she'll also need a mortgage circa 2,500,000 baht. Bangkok Bank fix the mortgage for the first two years at 5.75% & 6.5%, but after that she'll have to take her chances on a variable rate. This currently stands at 7.5%.

Since, many mambers have a good grasp of the economic situation in Thailand, I would like to know where you see Thai interest rates heading? Up or down?

[bendix]

Up.

Same as rates around the rest of the world.

[BKK90210]

Yep...up!...probably adding .25 every 3-6 mo.

But even with variable interest rate...there should be a cap also. Make sure she knows this before getting the loan.

[Old Man River]

Bendix is spot on. I could give you a long, drawn out economically based answer involving interest rates and currencies, but then at the end of the day be back to what Bendix has said. Go to the internet and track the yield curves of the USD and EUR and you will get a good idea of where short term THB interest rates are expected to go.

[Jowels]

But even with variable interest rate...there should be a cap also

That's what I was hoping, but I've looked into variable interest rate loans at Bangkok Bank and Krung Thai Bank and according to their mortgage staff there isn't a 'cap' system in Thailand. If anyone knows a Thai bank that does offer it, I would appreciate the info.

Thanks to the other two posters for their replies.

[fxm88]

Bendix is spot on. I could give you a long, drawn out economically based answer involving interest rates and currencies, but then at the end of the day be back to what Bendix has said. Go to the internet and track the yield curves of the USD and EUR and you will get a good idea of where short term THB interest rates are expected to go.

Then could give you a short economically based answer involving interest rate yield curves? Also, why use US and Eurozone yield curves? Is the Thai yield curve at http://www.thaibma.or.th/yieldcurve/YieldTTM.aspx insufficient for this purpose? Thanks!

Edited October 12, 2006 by fxm88

[Old Man River]

Page 5 B of the Nations Newspaper this morning has a good article on expectations of the THB interest rate yield curve. It states the yield curve is flattening, which means that expectations are that THB interest rates will not increase materially over the next 10 years. However this, of course, can change, but as of now that is what expected.

[Old Man River]

Bendix is spot on. I could give you a long, drawn out economically based answer involving interest rates and currencies, but then at the end of the day be back to what Bendix has said. Go to the internet and track the yield curves of the USD and EUR and you will get a good idea of where short term THB interest rates are expected to go.

Then could give you a short economically based answer involving interest rate yield curves? Also, why use US and Eurozone yield curves? Is the Thai yield curve at http://www.thaibma.or.th/yieldcurve/YieldTTM.aspx insufficient for this purpose? Thanks!

Because interest rates impact the THB currency and the BOT wants a relatively stable THB currency vis a vis its major trading partners. A trend towards rising or falling USD interest rates normally would cause somewhat of a similar trend in the Thai interest rates, so as to keep the USD/THB exchange rate relatively stable. People now think the USD interest rates will stop rising. This morning's paper said the THB yield curve (interest rates) is flattening out so it is now expected that the THB interest rates won't rise that much over the next several years. Shocks to the system can change this. If there is an armed conflict with North Korea, for example, all bets are off.

[BKK90210]

Well...Jowels

I just went through the website of Krungthai bank - on their PDF file-thai only version of lending rate....according to last week lending chart rate......

Just to name a few:

For mortgage & home eqity..

the cap rate = MRR+6.25 ,

if you defaulted/or late on the payment, then the cap = 15%

For home improvement and education

cap rate = MRR+3.00

If defaulted/or late, then the cap = 18%

I could be wrong but I think my thai is passable enough to understand it. I will let you know more if I come across anything better

Edited October 13, 2006 by BKK90210

[Jowels]

I spent a frustrating evening looking for information on that site last night. Unlike the other Thai banks there's not much English language content on the Krungthai bank site.

Based on what you've read, it seems the staff we spoke to were misinformed. I visited SCB this morning and the assistant there mentioned the maximum rate you could pay on their variable rate mortgages was currently 'capped' (sp?) at 12.5%. I'll keep looking and if I find any better deals, I'll post the details here.

Thanks so much for your help.