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Source:Thailand Condo News  Aug 17, 2019

Welcome News For Both Property Developers And Homebuyers As BOT Relaxes LTV Rule.

Welcome News For Both Property Developers And Homebuyers As BOT Relaxes LTV Rule.
Source:Thailand Condo News  Aug 17, 2019
The Bank Of Thailand announced that it was relaxing the loan-to value rules (LTV) for first home buyers who do not own other residences such that they would be granted a 90 per cent mortgage on a condominium and 95 per cent for a single detached house or townhouse. The relaxation of the rule also applies to borrowers or co-borrowers who pool together their financial earnings to buy their first residence via a loan. (a co-borrower in this case can be a relation or even a friend who assist with their financial credibility to help secure a loan but might not be listed as  the owner or co owner in the legal ownership documents.)


Many property developers welcomed the news as they said that the relaxation would help spur the property market in Thailand and also help the economy indirectly.
Since the rule was first introduced and became effective  in April 2019,the transfer of many residential units fell as many prospective homebuyers who had booked units could not secure loans due to the strict rules and this affected many property developers who we stucked with untransferred units which needed to go thru a legal cycle before these units can be reclaimed and put onto the market for sale again. The Thailand Condo market was badly affectedly the last quarter.
Many homebuyers were also relieved as the new rules would also make it easier for them to buy homes and banks need not adhere to the strict guidelines. The new rules would allow them to simply put a 10 percent downpayment for a condo and only 5 percent for a home or townhouse. Under the first homebuyers rule. Banks were also thrilled as it would once again help them to increase their lending portfolio which had shrunk in the last year.
Developers are anticipating that the property market improve by up to two per cent for the rest of this year which in reality represents about 20 per cent of the total property market value which is  worth about Bt760 billion.
The LTV affected many property developer’s financial results for the second quarter of the year, as most homebuyers had sped up the transfers of their residential projects in the first quarter coupled with a slowdown in sales and transfers the second quarter. Many reported double digit drops in their filings including  AP (Thailand)’s that reported total revenue for April to June 2019 as  Bt4.8 billion, down 25.9 per cent, and a net profit of only Bt488 million, down 59.32 per cent. Sansiri Plc posted revenue Bt4.28 billion, down 23 per cent drop from its Bt5.54 billion total for the same period in 2018. SC Asset Corporation’s revenue was Bt3.49 billion, down 10.51 per cent, and profit Bt282 million, a 37.33 per cent drop. For Supalai Plc, total revenue was Bt4.47 billion for the second quarter, a 30-per-cent drop from the Bt6.44 billion achieved in the same period of 2018 while LPN Development which has been one of the worst  performing developers the last few years, only had a revenue of about Bt1.67 billion, a drop of 26.75 per cent from last year  and a pathetic profit of  a mere Bt176.73 million, a 29.31 per cent decline from last year.
Thailand Condo News will shortly be giving a detailed analysis report of the condo market for the first half of 2019 and what is expected in the rest of 2019 and also 2020.