News
RETAIL BANKING | Staff Reporter, Thailand
view(s)

Thailand banks' loan growth to slow to 4.5% by end-2019 as mortgages take hit

The LTV limit of 80% on home loans will cool demand for mortgages.

The expansion of Thailand banks' loan books is expected to slow to 4.5% in end-2019 from 6.2% in the previous year following punitive measures to curb the growth of mortgages, according to a report from Fitch Solutions. Loan growth already shrunk to 5.8% in March from 6.2% in December 2018.

In an effort to curb risks, the central bank implemented successive rounds of macro-prudential measures including raising the loan-to-value (LTV) limit of 80% on home loans which kicked into efefct on April.

Also read: Thailand braces for fresh wave of bad loans as propery market cools

"These measures are likely to curtail credit demand for mortgages, which make up about 14% of all loans, over the remaining quarters of 2019. This negative effect is made more likely by a frontloading of housing transactions in Q119 before the onset of the new LTV limits," Fitch Solutions said in a report.

"This is corroborated by loan growth for the purchase of homes, which surged to 9.3% y-o-y in Q119, the highest figure since Q216."

The uncertainty surrounding the formation of the next government and escalaing trade tensions will also prompt less borrowing and stem credit demand.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.