The Thai central bank is to tighten mortgage lending rules to curb property speculation after growing concern about risks stemming from a prolonged period of near record-low interest rates.
The Bank of Thailand is to impose an 80 percent loan-to-value limit on mortgages for homes worth more than 10 million baht (US$310,000), effective Jan. 1 next year, for new lending, it said in a statement yesterday.
The same restriction applies to purchases of second homes.
Banks would also be prohibited from providing advances that exceed the value of a property.
Intense competition in the mortgage sector had led to a loosening of lending standards, Bank of Thailand Director of the Financial Stability Sakkapop Panyanukul said.
The monetary authority has seen instances of loan-to-value ratios exceeding 100 percent, as well as purchases with no down-payments.
“The macro-prudential measure should help reduce speculative buying and search-for-yield behavior,” Sakkapop said in a briefing in Bangkok. “This is a preventive measure.”
Currently, lenders are required to set aside more reserves for riskier mortgages, but there are no binding limits on the loan-to-value ratio.
In the minutes released on Wednesday of the central bank’s Sept. 19 decision to leave borrowing costs at 1.5 percent, the monetary policy committee said the share of nonperforming loans in the mortgage sector had increased.
An oversupply of condominiums in certain areas remained high, the panel said.
The central bank yesterday said it does not see a bubble in property prices and that the tighter rules would not affect economic growth.
The Bank of Thailand is edging closer to its first interest-rate increase since 2011 after a split 5-2 vote to leave the benchmark rate on hold last month.
Two monetary policy committee members voted for an increase to 1.75 percent.
The average selling price of condominium projects launched in the past few years has increased by between 5 percent and 10 percent year-on-year, Colliers International Group Inc said in its second-quarter report for Bangkok.
“This is not putting a break on the property sector,” Bank of Thailand Assistant Governor Wajeetip Pongpech said at the briefing about the new mortgage rules. “We are just lowering the speed.”
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
RSS