Household debt hit Bt13 trillion by end of 2019

[snoop1130]

Household debt hit Bt13 trillion by end of 2019

By THE NATION

 

 

Household debt rose 5.5 per cent from the third to the fourth quarters of last year to reach Bt13.24 trillion, the Office of the National Economic and Social Development Council reported on Friday (February 28).

 

“The ratio of household debt to gross domestic product (GDP) rose to 79.1 per cent, which was the highest in 11 quarters, since the first quarter of 2017,” it said in a report.

 

“However, household debt in the fourth quarter expanded more slowly than it had in the third, when it grew by 5.8 per cent compared to the second.

 

“The main reason was Thailand’s slowed economic expansion, which resulted in specialised financial institutions, commercial banks and cooperatives granting fewer loans.”

 

Non-performing loans (NPLs) for consumption from commercial banks in the fourth quarter amounted to Bt140.57 billion, a 16.7-per-cent increase over the same period of 2018 and representing 2.9 per cent of all loans, up from 2.81 per cent.

 

Property NPLs rose 3.71 per cent of the total and automotive NPLs 1.86 per cent, while personal and credit card NPLs showed improvement.

 

The council expects the household debt-to-GDP ratio to continue increasing but at a slower rate and ultimately show a year-on-year increase.

 

It noted that the Bank of Thailand is formulating measures to control household debt, such as setting a debt service ratio to gear loan amounts to the applicant’s earnings, urging financial institutes to adopt more responsible loan criteria, and promoting financial literacy to help the public budget more wisely.

 

Source: https://www.nationthailand.com/news/30383023

 

-- © Copyright The Nation Thailand 2020-02-28

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[Airalee]

19 minutes ago, snoop1130 said:

It noted that the Bank of Thailand is formulating measures to control household debt, such as setting a debt service ratio to gear loan amounts to the applicant’s earnings, urging financial institutes to adopt more responsible loan criteria, and promoting financial literacy to help the public budget more wisely.

Ban Neg-am mortgages for a start.

[smedly]

and as layoffs continue and a serious reduction to income continues due the floor falling out of tourism - it can only get worse - much much worse

[saengd]

The problem is numerical. As GDP slows it decreases but the volume of loans remain static, the ratio however will be much higher. So if at the end of the year GDP has fallen to USD 400 bill., consumer lending as a percentage of GDP will be in the 90's. NPL's are still quite low at under 3%, that's the important figure to watch, as long as people keep paying there's not a problem.

[Assurancetourix]

1 minute ago, saengd said:

as long as people keep paying there's not a problem.

effectively ; except that contact with the ground may be fatal.
I think of this guy who has just fallen from the top of a skyscraper and who arrives at the level of the 56th floor says to himself: so far so good.

[PatOngo]

9 minutes ago, saengd said:

as long as people keep paying there's not a problem.

The problem is they borrow more to keep paying!

[saengd]

Just now, PatOngo said:

The problem is they borrow more to keep paying!

The banks can be quite accommodating if people can't pay. BIL bought a house, against all the best advice, and one year later he can't afford the payments. The bank put him on a different repayment schedule which effectively cut his payments in half. His credit is out the window but he has his house and the bank has its loan.

[Yadon Toploy]

20 minutes ago, saengd said:

The banks can be quite accommodating if people can't pay. BIL bought a house, against all the best advice, and one year later he can't afford the payments. The bank put him on a different repayment schedule which effectively cut his payments in half. His credit is out the window but he has his house and the bank has its loan.

Up until a point.

 

And that point is going to arrive very soon for a lot of Thais.

[rkidlad]

26 minutes ago, saengd said:

The banks can be quite accommodating if people can't pay. BIL bought a house, against all the best advice, and one year later he can't afford the payments. The bank put him on a different repayment schedule which effectively cut his payments in half. His credit is out the window but he has his house and the bank has its loan.

Yea, everything is fine. Borrow more. Keep borrowing. Dig your way out our financial despair. Just remember to dig up. 

[Nobbie49]

So what? It is hh debt not National Debt. ND is I believe at 45% of GDP. Very healthy indeed so stop the scaremongering. US’s is at 100% and Japan’s at 200%. Just ask yourself the question: if you were making say 1mln (your personal GDP) each and every year, would you be worried if the bank lent you 1mln? Of course not. People are blinded by the sheer figures. Ooh the US is 20 trillion in debt, conveniently forgetting that the US’s GDP IS also 20 trillion iow the US earns 20 trillion each and every year (and growing). So TV stop wingeing about Somchai’s debt levels. They are his and only his problem

[Assurancetourix]

57 minutes ago, saengd said:

The banks can be quite accommodating if people can't pay.

 

I would not be as optimistic as you;
when a debtor can no longer afford to repay his debt (s), it is the bank (s) who find themselves in <deleted> with a house or a car or a truck on their arms;

Take a look at the banks of Thailand; you will see a huge catalog of goods seized because the buyer had eyes bigger than his stomach.
And since nobody can afford to buy these second-hand houses, cars, trucks, so the banks are left with wrecks that cannot be bought; and they are going to be the ones who will have to pay the broken pots.

 

You cannot grasp what does not exist.

[DrTuner]

The famous Thai middle class at full swing.

[saengd]

46 minutes ago, Nobbie49 said:

So what? It is hh debt not National Debt. ND is I believe at 45% of GDP. Very healthy indeed so stop the scaremongering. US’s is at 100% and Japan’s at 200%. Just ask yourself the question: if you were making say 1mln (your personal GDP) each and every year, would you be worried if the bank lent you 1mln? Of course not. People are blinded by the sheer figures. Ooh the US is 20 trillion in debt, conveniently forgetting that the US’s GDP IS also 20 trillion iow the US earns 20 trillion each and every year (and growing). So TV stop wingeing about Somchai’s debt levels. They are his and only his problem

Even better than that, 42% of that is debt owed in THB, borrowed from within Thailand, only about 3% is overseas debt.

[whiteman]

The sky is falling they are losing there jobs full up to there eyeballs in debt but the bhat keeps on keeping on even with the virus it hangs in there.

[saengd]

48 minutes ago, Assurancetourix said:

 

I would not be as optimistic as you;
when a debtor can no longer afford to repay his debt (s), it is the bank (s) who find themselves in <deleted> with a house or a car or a truck on their arms;

Take a look at the banks of Thailand; you will see a huge catalog of goods seized because the buyer had eyes bigger than his stomach.
And since nobody can afford to buy these second-hand houses, cars, trucks, so the banks are left with wrecks that cannot be bought; and they are going to be the ones who will have to pay the broken pots.

 

You cannot grasp what does not exist.

Except the balance sheets of Thai banks are in excellent shape, Moody's and Fitch even upgraded them all recently, I wouldn't be too worried that they might suffer from distressed sales, especially since Non-Performing Loans remains so low at under 3%.

[Boomer6969]

3 hours ago, snoop1130 said:

It noted that the Bank of Thailand is formulating measures to control household debt, such as setting a debt service ratio to gear loan amounts to the applicant’s earnings, urging financial institutes to adopt more responsible loan criteria, and promoting financial literacy to help the public budget more wisely.

I admire the unbelievably advanced thinking. Obvious candidates for a Nobel prize of economics.

[kingdong]

2 hours ago, saengd said:

 as long as people keep paying there's not a problem.

Like the " sub prime " loans of 2008?

[kingdong]

2 hours ago, saengd said:

The banks can be quite accommodating if people can't pay. BIL bought a house, against all the best advice, and one year later he can't afford the payments. The bank put him on a different repayment schedule which effectively cut his payments in half. His credit is out the window but he has his house and the bank has its loan.

Exactly what happened in the USA in 2008 trouble is when the value of your des res falls to half of what you paid for it people tend to hand the keys back,still how nice to know the banks are in the punters corner,diamond geezers,not a banker yourself are you?

Edited February 28, 2020 by kingdong

[saengd]

10 minutes ago, kingdong said:

Like the " sub prime " loans of 2008?

Not really. Sub prime loans were nothing new, the problem was they were securitised, packaged and sold as grade one debt, which they weren't, if banks and brokerages had understood that they wouldn't have bought them in the first place.

[saengd]

6 minutes ago, kingdong said:

Exactly what happened in the USA in 2008 trouble is when the value of your des res falls to half of what you paid for it people tend to hand the keys back,still how nice to know the banks are in the punters corner,diamond geezers,not a banker yourself are you?

Falls in the value of real estate in Thailand are almost unheard of, that's because property doesn't increase in value here the same way it does in the West.

[Airalee]

2 hours ago, saengd said:

The banks can be quite accommodating if people can't pay. BIL bought a house, against all the best advice, and one year later he can't afford the payments. The bank put him on a different repayment schedule which effectively cut his payments in half. His credit is out the window but he has his house and the bank has its loan.

Can you run some example numbers (with interest rates) that show how a mortgage payment can be cut in half other than by tacking on a huge balloon payment at the end similar to what HAMP did for homedebtors in the US?
 

Feel free to use this site to help with the math...

 

 https://www.mortgagecalculator.org

 

The banks give the people enough rope to hang themselves and then, instead of letting the person die, they loosen the rope just enough and turn the person into a lifetime debt slave.

 

Every Neg-am loan out there that was written based on the capacity to repay the loan at the teaser rate (while the principal balance grows) is a ticking time bomb.

 

I remember when Bernanke said “Subprime is contained”.  All of us bubble bloggers on Housingpanic laughed our asses off because we knew it wasn’t about “subprime”.   Alt-a and Prime loans had the same toxic characteristics.

 

Got popcorn?

Edited February 28, 2020 by Airalee

[saengd]

2 minutes ago, Airalee said:

Can you run some example numbers (with interest rates) that show how a mortgage payment can be cut in half other than by tacking on a huge balloon payment at the end similar to what HAMP did for homedebtors in the US?  
 

The banks give the people enough rope to hang themselves and then, instead of letting the person die, they loosen the rope just enough and turn the person into a lifetime debt slave.

 

Every Neg-am loan out there that was written based on the capacity to repay the loan at the teaser rate (while the principal balance grows) is a ticking time bomb.

 

I remember when Bernanke said “Subprime is contained”.  All of us bubble bloggers on Housingpanic laughed our asses off because we knew it wasn’t about “subprime”.   Alt-a and Prime loans had the same toxic characteristics.

 

Got popcorn?

In the case of my BiL they extended the duration by ten years.

[Airalee]

1 minute ago, saengd said:

In the case of my BiL they extended the duration by ten years.

That won’t cut payments in half.  You can extend a 15 year mortgage to a 30 year and it won’t cut payments in half.  Not even close.

[saengd]

2 minutes ago, Airalee said:

That won’t cut payments in half.  You can extend a 15 year mortgage to a 30 year and it won’t cut payments in half.  Not even close.

I've tried to give an example of the ways in which banks will accommodate borrowers to some degree. I thought it was useful to include an example but I haven't dug into the exact details of my BiL's loans, all I know is the high level that I've set our here and some of this info is second hand via my wife. Perhaps the repayments weren't exactly cut in half, maybe that was an exaggeration on his/her part, maybe the loan period wasn't exactly doubled, ask me if I care! Again, the point I made is that banks will accommodate borrowers who are in difficulty rather than end up owning distressed assets.

[Airalee]

If someone can find me a chart like this one for Thailand....and let me know how (if we are even allowed to) to buy puts on specific banks...it would be much appreciated.  This was our “guide” to shorting the lenders during the GFC.

 

 

[baansgr]

14 minutes ago, saengd said:

Falls in the value of real estate in Thailand are almost unheard of, that's because property doesn't increase in value here the same way it does in the West.

Tell that to those that bought Riviera off plan at 120,00 per Sqm a few years ago, and now can't even get 80k per sqm...thats over a 30% drop....loads more examples also

[Airalee]

1 minute ago, saengd said:

I've tried to give an example of the ways in which banks will accommodate borrowers to some degree. I thought it was useful to include an example but I haven't dug into the exact details of my BiL's loans, all I know is the high level that I've set our here and some of this info is second hand via my wife. Perhaps the repayments weren't exactly cut in half, maybe that was an exaggeration on his/her part, maybe the loan period wasn't exactly doubled, ask me if I care! Again, the point I made is that banks will accommodate borrowers who are in difficulty rather than end up owning distressed assets.

Like I said.  They will pull a HAMP type thing and turn the borrower into a debt slave.  I would hate to have the banks accommodate me.

[saengd]

1 minute ago, baansgr said:

Tell that to those that bought Riviera off plan at 120,00 per Sqm a few years ago, and now can't even get 80k per sqm...thats over a 30% drop....loads more examples also

Yes of course, off plan, that's speculating. When I wrote that falls are almost unheard of I was refering to traditional mainstream real estate.

[Airalee]

3 minutes ago, saengd said:

I've tried to give an example of the ways in which banks will accommodate borrowers to some degree. I thought it was useful to include an example but I haven't dug into the exact details of my BiL's loans, all I know is the high level that I've set our here and some of this info is second hand via my wife. Perhaps the repayments weren't exactly cut in half, maybe that was an exaggeration on his/her part, maybe the loan period wasn't exactly doubled, ask me if I care! Again, the point I made is that banks will accommodate borrowers who are in difficulty rather than end up owning distressed assets.

And your example was so grossly exaggerated that the numbers just don’t add up and call into question your credibility on such matters.

 

mortgagecalculator.org

[saengd]

2 minutes ago, Airalee said:

Like I said.  They will pull a HAMP type thing and turn the borrower into a debt slave.  I would hate to have the banks accommodate me.

Maybe, dunno, haven't seen the detail and don't want to.