Despite the prospect of higher interest rates in Thailand, borrowers across the board are unlikely to be hurt because the pass-through effect for rate hikes takes time to surface, says Kasikorn Research Centre (K-Research).
"[Higher interest rates] are not anticipated to have a dramatic effect [on borrowers]. It takes time for higher interest rates to take full effect," said K-Research managing director Charl Kengchon.
"Housing and hire-purchase loans have fixed interest rates at a certain level. It has to be assessed further how banks will adjust their deposit and lending rates."
Auto loan value rose 12.4% year-on-year in the three months to June, up from 10.6% growth in the first quarter, according to Bank of Thailand data.
Housing loan value rose 6.2% year-on-year in the second quarter, up from 5.8% in the previous quarter.
But new borrowers are poised to be hit by rising borrowing costs as a result of higher rates, since banks will take into account the cost of lending and interest rate expectations in the future, Mr Charl said.
Households bearing debt burdens associated with floating interest and businesses related to high borrowing should take heed of potentially higher borrowing cost and debt rollover risk, said Siam Commercial Bank's Economic Intelligence Unit (EIC).
Earlier, Bank of Thailand governor Veerathai Santiprabhob said three core macroeconomic factors would be assessed before a change in interest rate takes place.
Thailand's economic recovery, inflation and financial stability are the three main factors the central bank takes into account when deliberating monetary policy, according to Mr Veerathai.
Regarding Thailand's household debt, the ratio is expected to stabilise going forward with the central bank's recent macroprudential measures to curb speculation in the property market, prompting financial institutions to be cautious in providing loans, Mr Charl said.
Thailand's continuous economic recovery -- annual nominal GDP growth is projected at 5-6% -- should rein in household debt, he said.
Household income growth grew by 0.3% in 2017 and 2.4% in the first half, lower than Thailand's nominal GDP growth, which expanded by 6.3% last year and 6.2% in the first six months of 2018, according to the EIC.
Thailand's household debt was valued at 12.34 trillion baht, or 77.6% of GDP on a seasonally adjusted basis, at the end of the second quarter.
First-quarter household debt stood at 12.2 trillion baht or 77.7% of GDP.
Household debt surged by 494 billion to 12 trillion baht at the end of last year, from 11.5 trillion a year earlier.
The country's household debt-to-GDP ratio peaked at 80.8% at the end of 2015 before falling to 77.3% at the end of March last year as a result of higher GDP growth relative to credit expansion.