NESDC raises concern over housing debt

NESDC raises concern over housing debt

Quick cash advertisement can be seen everywhere for those in need of money. (Post Today photo)
Quick cash advertisement can be seen everywhere for those in need of money. (Post Today photo)

The state planning unit is concerned about the increase in housing debt, which is at its highest since mid-2017.

The National Economic and Social Development Council (NESDC) reported on Monday household debt rose by 6.3% year-on-year in the first quarter to 13 trillion baht, making up 78.7% of total GDP, which was the highest in nine quarters since the first quarter of 2017.

“Household debt is likely to increase in the second quarter and it requires close monitoring because overall commercial bank loans for personal consumption increased at a high level of 9.2% in the second quarter,” said Thosaporn Sirisamphand, NESDC secretary-general.

Figures for household debt in the second quarter are not yet available.

Non-performing loans (NPLs) increased with an outstanding balance in the second quarter of 127 billion baht, a rise of 10% from the same period last year. It accounted for 2.74% of total loans and 2.75% of total NPLs, said Mr Thosaporn.

Outstanding NPLs for cars and credit cards increased at accelerated rates of 32.3 and 12.5%, respectively.

Personal loans under high supervision, which were still at a high level, and credit card loans with outstanding balances over three months continued to expand.

As for trends in household debt for the second half of 2019, housing loans are expected to slow from the first half because of softer demand for housing and restrictions on financial institutions’ lending, he said.

However, credit quality is lower now that commercial banks competed to grant credits for relaxed approval criteria, as well as providing loans for housing in amounts higher than the real value before the central bank introduced loan-to-value measures in April, said Mr Thosaporn.

“The agency forecasts household debt as unlikely to increase over 80% of GDP this year based on economic growth projection of 3% this year,” he said.

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