More people falling into heavy debt

Household debt climbed in the third quarter as people's ability to repay debts declined, partly because of the government's policy on first-time home and car buyers.

Outstanding debts for personal consumption in the third quarter escalated 20.4% year on year to 2.74 trillion baht, compared with increases of 15.7% and 17% in the first and second quarters.

According to a National Economic and Social Development Board (NESDB) report, home loans also rose 10.3% in the third quarter, up from 9.7% in the second quarter and 9.9% in the first quarter, while auto loans increased 33.6% in the third quarter, compared with rises of 24.5% in the second quarter and 20.2% in the first quarter.

Outstanding debts for personal consumption for other purposes were also reported to surge 30.3% in the third quarter against 27% in the second quarter and 25.9% in the first quarter.

According to the government's planning agency, outstanding debts for personal consumption without collateral and leasing amounted to 239.92 billion baht for the period, up 15.1%, while debt incurred from credit cards totalled 226.49 billion baht, up 9.56%, mostly for purchase of consumer goods and housing rehabilitation after devastating flooding late last year.

NESDB deputy secretary-general Suwanee Khamman said the drop in debt repayment ability reflected Thai people's excessive household spending.

Statistics also showed debt defaults of more than three months under the agency's supervision surged by 37.8% in the third quarter, equivalent to 7.38 billion baht.

Debt defaults totalled 6.15 billion baht in the first quarter, up 12.8%, with the figures in the second quarter totalling 6.74 billion baht, up 29.5%.

Debt default of more than three months on credit card loans increased by 11.1% to 5.39 billion baht against 5.3 billion baht in the first quarter (13.7% increase), and 5.23 billion baht in the second quarter (9.2% increase).

Non-performing loans incurred from loans for consumption increased 25.1% in the third quarter, equivalent to 56.52 billion baht, making up 21.4% of the country's total non-performing loans.

The agency suggested authorities closely monitor such spending behaviour, especially by low-income and middle-income households.

Mrs Suwanee said household savings were 7.8% of gross domestic product in 2011 _ compared with more than 10% in other Asean countries.

About the author

Writer: Chatrudee Theparat
Position: Business Reporter