BOT reports satisfactory result of LTV rule
The Bank of Thailand hailed the success of its loan-to-value rule, which has somewhat cooled down demand with slight effect on purchasing power.
Effective in January 2011, the rule demands downpayment of at least 10 per cent of sale prices, for condominium units priced below Bt10 million. Commercial banks can extend loan only upto 90 per cent of the property value.
Thongurai Limpiti, an assistant governor of the central bank, said that the rule has led to lower acceleration in loan extension.
"The overall picture improves after the rule was imposed. Loan overheating is prevented, but growth is still witnessed in line with our estimate," she said.
The central bank originally planned to impose a similar rule on low-rise development in January 2012, to limit loans to 95 per cent of house prices. However, it is postponed to next year, following the floods which have plunged both demand and supply.
