Gen Y make up more than 60% of housing loan bad debts: credit bureau

Accumulated non-performing loans (NPLs) for housing totalled 200 billion baht as of the first quarter of this year, said NCB chief executive Surapol Opastien. Debts on which there have been payment defaults for more than 90 days are counted as NPLs.

“About 124 billion baht of NPLs came from borrowers in Gen Y, which comprises people who have recently started working, or a family,” said Surapol.

Meanwhile, housing debts in the special mention (SM) category – defaults from 30 to 90 days – total 180 billion baht, of which about 118 billion baht were owed by borrowers in the Gen Y age group.

“If we combine both the NPL and SM groups, Gen Y has accumulated over 242 billion baht bad debts in the housing market, covering nearly 160,000 contracts,” said Surapol.

He warned that this situation would lead to institutions providing housing loans employing even stricter criteria in granting new loans, thus making it harder for first-time jobbers and young families to buy their first houses.

“Rejection rate for housing loans is now at 60-70% and could grow even higher, especially for residential units priced under 3 million baht which target buyers in the lower income bracket,” said Surapol.

Faced with rising unsold units, property developers are urging the Bank of Thailand to consider relaxing its loan-to-value (LTV) mortgage limit rule to exempt first-home buyers, the NCB chief said.

The measure had been implemented during the Covid-19 crisis to stimulate the slumping housing market, by allowing homebuyers to apply for a loan equivalent to 100 per cent of the property's value.

In a broader perspective, NCB earlier this week reported that Thailand’s household debts at the end of first quarter of 2024 amounted to 16.3 trillion baht, with 1.09 trillion baht classified as NPLs.

NPLs from housing loans made up for 20% of total NPLs, an increase of 18% from the same period of previous year.