Central bank delays LTV ratio rule to 2013
The Bank of Thailand on Tuesday announced a 1-year delay to the planned implementation of the loan to value ratio rule on low-rise residential purchases,to help alleviate financial burdens of lenders, property developers and borrowers after the nation's
The rule will limit mortgage loans at 95 per cent of home value. At present, some banks offer 100 per cent of home value.
This will apply to low-rise houses below Bt10 million. The central bank on Jan 1, 2011 introduced the maximum 90 per cent LTV for condominium priced below Bt10 million.
"The central bank's Financial Institutions Policy Committee is aware of this problem. To many, floods may spark a need for home repair," said senior director Somboon Chitphentom, who added that the delay would benefit lenders as mortage loan growth is below commercial loan growth.
Mortgage loans for low-rise residential houses in the third quarter expanded 12-13 per cent in the third quarter.
To help borrowers obtain loans for house repair, the central bank also stipulated that the risk weight of such loans is only 35 per cent of loan value, from 75 per cent. This would stay until the end of next year.
About 40 per cent of 2.4 million houses in Bangkok and about 40 per cent of four million houses in Nonthaburi, Pathum Thani, Samut Sakhon, Samut Prakan and Samut Songkhram have been hit by the floods, according information given to the central bank. Each unit requires about Bt50,000-Bt10,000 for repair.
