The Change of Bank of Thailand Macroprudential Policy for Mortgage Loan & Thai Real Estate Business and Economic Impacts

  • ประเสริฐ เเต่ดุลยสาธิต
Keywords: Leading Sector, Mortgage Loan, Search for Yield, Macroprudential

Abstract

Real Estate is the leading sector driving Thai economics growth. The growth of Thai Real Estate sector itself especially the residential segment has drastically grown up for the last decade. The growth has been resulted from an all-time high liquidity of Thai economy and The continuing lowest interest rate for a longest time were happened in Thai economy this has been the key factor during the competition in the mortgage loan market while Bank of Thailand has been observed the relaxation of mortgage loan approval among commercial banks as well as the increase in search for yield home buying, we saw the unreal demand in the real estate market. This leads to the increase in non-performing loan which contrasts to the current economic growth. With the past experience of real estate sector as the start of economics crisis, The Bank of Thailand decided to implement macroprudential policy on mortgage loans in order to build a good financial discipline and reduce the risk in the real estate market. This would help control property price increase which will support housing real demand. This macroprudential policy has a significant negative impact to the real estate market as well as the overall Thai economy. The purpose of this article is to give feedback on the impact of macroprudential which is inappropriate both in term of direction and timing under current World economic turmoil and at the same time to give recommendation aiming to reduce business impact occurred from macroprudential policy and sustains long term Thai economics growth.

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Published
2020-04-30