High household debt concerns intel centre

The centre was concerned that low-income earners would have less capacity to take on debt, she said.
However, high-income earners’ D/I ratio was not at an alarming level.
“We asked the Bank of Thailand and monitor data from the National Statistical Office. And we look at the borrowing capacity of each group. Those earning low incomes have had a big increase in their debt and this could be a concern for the central bank,” she said.
The extension of credit by commercial banks was not too fast, compared with the household credit extended by state-owned banks, she said.
Commercial banks’ household exposure has seemed to jump in the past 10 year, but leases and other products have been brought into their loan portfolios.
“From 2005-06, commercial banks have undergone internal restructuring through the inclusion of their subsidiaries’ non-bank loan portfolios. That prompted big increases in this type of debt,” she said.
The property market seems to be frothy but SCB EIC has not seen any signs of a bubble in the past three to four months.
“The property market has been growing rapidly. Based on data collected from developers, most buyers bought residential units for occupancy, so we’re not worried much,” she said.
Charl Kengchon, managing director of Kasikorn Research Centre, said the ballooning of household debt was partly due to a change in rural lifestyles towards urban lifestyles. Rural household debt includes auto and mobile-phone loans.
“The central bank may have concerns that if monetary policy changes direction in the future or the policy rate rises, that could increase the burden on this group of people. Now, the rate might |not have much weight on them,” |he said.