Amid slower economic growth, the expected easing of the loan-to-value (LTV) ratio is likely to provide limited support for mortgage loans, says the Housing Finance Association.
According to Alongkot Boonmasuk, the association’s secretary-general, the LTV relaxation for second- and third-time homebuyers — if approved as requested by developers — is expected to stimulate housing market growth, particularly in the upper-income segment.
Homebuyers with positive purchasing power typically fall into the segment with a minimum home price of 5 million baht a unit, and some of them are business owners.
Meanwhile, many small and medium-sized enterprises (SMEs) continue to face significant challenges, as the country’s economic growth remains sluggish, said Mr Alongkot.
“If the central bank permits the easing of the LTV for second- and third-time buyers, it will support sentiment in the property and housing loan market but won’t significantly drive market growth. The primary factor influencing industry growth will still be the pace of economic recovery,” he said.
However, property developers and banks are expected to adjust their business strategies if the regulator approves the LTV relaxation. They may redefine their market segments, targeting homes priced over 3 million baht a unit and potentially reducing the size of residential units to better meet customer demand.
Mr Alongkot noted that mortgage growth has been sluggish since the beginning of the year, in line with the country’s economic conditions and the weaker purchasing power and debt repayment capabilities of homebuyers.
The association expects only marginal growth in housing loans for 2025.
Kasikorn Research Center (K-Research) also forecasts that the relaxation of LTV measures for second- and third-time buyers will help stimulate new loan approvals, particularly among middle- to upper-income homebuyers who are considered to be a manageable credit risk by banks.
However, the overall impact on housing loans is expected to remain limited due to the slow economic recovery.
The Bank of Thailand is expected to carefully assess a range of factors before easing the LTV ratio, including speculative risk, housing demand, remaining supply in the market, and details and timing of the LTV adjustment.
Homes priced over 10 million baht a unit are a key focus, as this segment is currently subject to stricter LTV measures for second and third contracts.
If the proportion of this housing segment increases by 1% of the total market, it could boost housing loan growth by 0.1–0.2 percentage points.
This assessment is based on the expectation that the LTV relaxation will take effect in the second half of the year, according to K-Research.
Despite this, the research centre still expects only a marginal 0.5% growth in housing loans for the banking industry in 2025.
