The Bank of Thailand, concerned about the number of property loans going bad, said on Thursday it will require buyers of homes worth more than 10 million baht and of second homes to make down payments of at least 20%.
The move, to take effect in January, comes amid elevated household debt and rising bad mortgage loans. Intensifying competition among banks for mortgage business has led to looser lending for property purchases.
At present, a Bank of Thailand guideline on property loans says buyers of homes valued at more than 10 million baht should make down payments of at least 20% but this is not mandatory.
Wajeetip Pongpetch, an assistant governor, said that under new rules, the 20% minimum down payment will be mandatory and the loan-to-value (LTV) ratio will be maximum 80%.
"The measures are aimed at preventing speculation and cutting back mortgage loans for no real residence," she said.
For purchases of residents that are a second home, or more, there will also be a requirement for minimum down payment of 20%.
At present, buyers of second homes costing less than 10 million baht only should make a down payment of at least 5% for low-rise housing and at least 10% for a condominium.
Mrs Wajeetip said there are no bubbles in the property sector.
However, the central bank is worried about increased vulnerability in the property sector, according to minutes of the central bank on Wednesday.
Speculation in the property market has pushed up home prices.
According to a Bank of Thailand index, condominium prices rose 5.6% in the first half of 2018 from a year earlier. In the second half of 2017, prices climbed just 0.6% from the year-earlier period.
Housing loans rose 6.2% in the end of the second quarter from a year earlier, while non-performing mortgages hit 3.39% of the total, the highest level since the end of the global financial crisis in 2009.
Mrs Wajeetip said the latest measures may also help reduce household debt, which stood at 12.3 trillion baht at the end of June, the equivalent of 77.5% of gross domestic product and among the highest in Asia.
Last year, the central bank tightened rules on credit cards and personal loans to battle the debt problem.