Loan rejections soar for Thai homes under 3 million baht
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.
