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Household debt hit Bt13 trillion by end of 2019


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1 minute ago, Airalee said:

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

Give it a rest for gods sake, it was a lose example, not a precise calculation governed by FCA regs!

 

Enough of this nonsense, folks too argumentative tonight, must be past booze o'clock on a Friday night...OUT

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1 minute ago, saengd said:

Give it a rest for gods sake, it was a lose example, not a precise calculation governed by FCA regs!

 

Enough of this nonsense, folks too argumentative tonight, must be past booze o'clock on a Friday night...OUT

Precise calculation based on FCA regs?  What on earth does that mean?  It’s simple math and math doesn’t lie.  Trying to pin this on alcohol (I rarely drink) is a straw-man. 

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Best savings account I can find pays 1.5%. Our mortgage, which I paid off at the double, had a rate of 6.25% (after the initial promotion period). The banks here are making a mint. The people are been screwed at both ends. I have no worries about the banks folding. But at some point, they're going to have to narrow that gap.

 

And to @saengd My mortgage was THB1,100,000 initially. My repayments were set at THB7500/month. At 6.25%, the interest would be 68,750/year or THB5700/month. Cutting repayments in half would have seen my debt increasing by THB1800/month. The maximum the bank could have cut payments would have been 25%. This was on a shortened repayment plan. On a maximum repayment plan, a 10% cut would be resulting in the debt increasing.

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41 minutes ago, Thunder26 said:

The problem is the interest which is extremely high for people who mortgage a house. It is similar to a robbery in my opinion. Expect the household market to crash one day as people cannot afford being robbed anymore.

It’s not so much that the interest rates are too high as it is the prices are too high. 
 

Smart money will buy assets when money is “expensive” (high interest rates).  Dumb money focuses on the payment instead of the price and buys overinflated assets with cheap money (low interest rates) coupled with loose lending standards.

 

Which would you prefer?  A lower interest rate and a high price or a higher interest rate and a low price, (with both payments being equal).  
 

Because people have been conditioned by the banks to shop for things (Houses, cars and other big ticket expenditures) based on payment (with no consideration for the price)...guess who wins every time?

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15 hours ago, saengd said:

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%.

I live on a fairly  new, middle class mooban, where the average price of a new house was 3M  Bht.  There are about 3% now up for sale urgently.  However my wife knows many here who are on the brink of default because  their jobs have been cut back.  If the tourist trade continues to reduce it will be very bad news for many neighbours.

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16 hours ago, Assurancetourix said:

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;

the banks gave you a loan, you have to repay with interest, but they created that money out of NOTHING AT ALL

 

you default on your loan, the bank got your interest payments + the house/car that they can resell

 

sadly, banks here, still asking about full price or very little discount for houses that have been empty and rotting for YEARS

 

but the magic is: as long as it is not sold for a loss, they don't have to put it in the books

 

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3 minutes ago, justin case said:

sadly, banks here, still asking about full price or very little discount for houses that have been empty and rotting for YEARS

They're not allowed to sell for less than the amount still owed.

The laws were created to stop banks lending unreasonable amounts, it didn't work, they still loaned too much, and are now stuck with the properties.

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. . . promoting financial literacy to help the public budget more wisely.

 

Can't wait for the day your average Thai market stallholder will no longer need a smartphone or calculator to work out the total cost of a 50 baht kilo of oranges and a 20 baht bunch of bananas.

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17 hours 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.

Just to close this open loop:

 

I asked my wife to check with the BiL today to find out exactly what the deal was with his re-mortgage, this is what came back:

 

Mortgage payments were cut from 16,000 to 8,000 Baht a month, the duration was extended by eight years. There's no mention of HAMP, HEMP or any other acronym in the feedback nor does the word balloon crop up. BiL is happy with the deal because it means he keeps his house and he can unwind the situation at his leisure, apparently he will deal with whatever fallout there is from this in the future, when the time comes. In the meantime he's trying to sell his house in acknowledgement that he should never of got into the deal in the first place - I'm told the lender is the yellow bank, B of A I guess.

 

Loop closed, all done, can't believe I wasted fifteen minutes of my life reaffirming this to you, it won't happen again!

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2 minutes ago, saengd said:

Just to close this open loop:

 

I asked my wife to check with the BiL today to find out exactly what the deal was with his re-mortgage, this is what came back:

 

Mortgage payments were cut from 16,000 to 8,000 Baht a month, the duration was extended by eight years. There's no mention of HAMP, HEMP or any other acronym in the feedback nor does the word balloon crop up. BiL is happy with the deal because it means he keeps his house and he can unwind the situation at his leisure, apparently he will deal with whatever fallout there is from this in the future, when the time comes. In the meantime he's trying to sell his house in acknowledgement that he should never of got into the deal in the first place - I'm told the lender is the yellow bank, B of A I guess.

 

Loop closed, all done, can't believe I wasted fifteen minutes of my life reaffirming this to you, it won't happen again!

You have explained nothing.  
 

The numbers you provide are impossible.  

 

It is impossible to cut a mortgage loan payment in half by extending the payments by only eight years unless it was a 5 year mortgage (@6.5%) extended to 13 years and the original loan amount was approximately ฿800,000 baht***

 

***numbers are approximate but have been run through a mortgage calculator in order to show that they are impossible.

 

https://www.mortgagecalculator.org

who gets 5 year mortgages?  Answer...nobody.

 

If you try plugging some numbers into a loan calculator, you will see that even if it was a 2m baht loan on a 15 year mortgage at the usual 6.5% with the original payment being around 16,000...even if you extend the repayment period to 50 years you won’t come close to cutting the payments in half.

 

That you can’t see that the numbers cannot work with the parameters you have set again calls into question your credibility on ANY financial matter.


Of course there was no mention of HAMP.  That stands for Home Affordable Modification Program.  An Obama era mortgage rescue program in the US.  That you don’t even know that also makes every bit of financial advice you give questionable. 

 

If you don’t like me challenging your financial garbage, you can either stop posting such ridiculous things or you can put me on ignore so that you don’t have to read them.

 

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16 hours ago, Airalee said:

It’s not so much that the interest rates are too high as it is the prices are too high. 
 

Smart money will buy assets when money is “expensive” (high interest rates).  Dumb money focuses on the payment instead of the price and buys overinflated assets with cheap money (low interest rates) coupled with loose lending standards.

 

Which would you prefer?  A lower interest rate and a high price or a higher interest rate and a low price, (with both payments being equal).  
 

Because people have been conditioned by the banks to shop for things (Houses, cars and other big ticket expenditures) based on payment (with no consideration for the price)...guess who wins every time?

Yes and when the financial world looses control of  `Interest rates .. with this amount of World Debt.. its going to be a huge mess... watch Junk bond and Corporate bonds rates for any large spike in the near future. usually during a Recession .

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1 hour ago, Airalee said:

You have explained nothing.  
 

The numbers you provide are impossible.  

 

It is impossible to cut a mortgage loan payment in half by extending the payments by only eight years unless it was a 5 year mortgage (@6.5%) extended to 13 years and the original loan amount was approximately ฿800,000 baht***

 

***numbers are approximate but have been run through a mortgage calculator in order to show that they are impossible.

 

https://www.mortgagecalculator.org

who gets 5 year mortgages?  Answer...nobody.

 

If you try plugging some numbers into a loan calculator, you will see that even if it was a 2m baht loan on a 15 year mortgage at the usual 6.5% with the original payment being around 16,000...even if you extend the repayment period to 50 years you won’t come close to cutting the payments in half.

 

That you can’t see that the numbers cannot work with the parameters you have set again calls into question your credibility on ANY financial matter.


Of course there was no mention of HAMP.  That stands for Home Affordable Modification Program.  An Obama era mortgage rescue program in the US.  That you don’t even know that also makes every bit of financial advice you give questionable. 

 

If you don’t like me challenging your financial garbage, you can either stop posting such ridiculous things or you can put me on ignore so that you don’t have to read them.

 

Have relayed your message to BiL that you think he's lying, he says he doesn't care what you think, if you like I can PM you with his number so you can argue with him direct and leave me out of this. I note you say the figures he gives are "impossible, unless"....hmmm!!!

 

Didn't ask what the term was nor the loan amount, not my business. I have seen the house once though because we had to drop something off there, it's basically a glorified shack, 800k, certainly not more.

 

Personally, I know sweet  nothing much at all about mortgages, they never were my thing. As for HAMP being a US thing, cool, but I'm a Brit. and economics is my thing, preferably Thai economics.

Edited by saengd
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6 minutes ago, Airalee said:

Then, as I said....stick to what you know.  Your numbers don’t add up....nor do your BILs.  I never called him a liar...but his numbers make no sense....none.  It’s simple math.  

What if I decide I want to get to the bottom of this, just to satisfy my curiosity and what if I get BiL to tell me his loan amount and duration etc and he comes back and tells me it was 800k and 5 years, moved to 13 years, where will be then? I mean, it's not so much that I want to waste another second of life on this issue but you've been so hostile and insulting I feel as though I just might, just to prove a point.

Edited by saengd
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34 minutes ago, jeffreysearch said:

Yes and when the financial world looses control of  `Interest rates .. with this amount of World Debt.. its going to be a huge mess... watch Junk bond and Corporate bonds rates for any large spike in the near future. usually during a Recession .

It will definitely be interesting.  How long central banks will be able to play the “extend and pretend” game is anybody’s guess.  With the global derivatives market estimated to be over a quadrillion dollars all I can say is....got popcorn?

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Just now, saengd said:

What if I decide I want to get to the bottom of this, just to satisfy my curiosity and what if I get BiL to tell me his loan amount and duration etc and he comes back and tells me it was 800k and 5 years, moved to 13 years, where will be then?

Run the figures through the mortgage calculator and fiddle with the inputs.  Get to know what the parameters are.  I have never heard of a 5 year mortgage and I will bet you haven’t either. 

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Just now, Airalee said:

Run the figures through the mortgage calculator and fiddle with the inputs.  Get to know what the parameters are.  I have never heard of a 5 year mortgage and I will bet you haven’t either. 

You didn't answer my question. I'm prepared to ask BiL but I'm not gonna play around with mortgage calculators or any other kind of similar thing, I don't have a horse in this race but it's starting to look as though you do!

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Just now, saengd said:

You didn't answer my question. I'm prepared to ask BiL but I'm not gonna play around with mortgage calculators or any other kind of similar thing, I don't have a horse in this race but it's starting to look as though you do!

My horse is challenging your obviously erroneous numbers.  You made a statement...I called you out on it and provided concrete numbers.  The onus lies with you.

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5 minutes ago, Airalee said:

I have never heard of a 5 year mortgage and I will bet you haven’t either. 

I have, I had a five year mortgage on a new build in Pattaya about 20 years ago, it was for 1 million if I recall correctly.

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Oh my goodness, wot to do now, an unheard of mortgage type really does exists, perhaps this is not Kansas after all!

 

Stay tuned, I'll see if I can't extract the info. from of BiL but there's no guarantee he'll tell me, you'll have to take what happens next on good faith that I will try my best and relay the truth. 

 

TBH it only makes sense that a 5 yr mortgage would exist, there's loads of real estate in Thailand under 1 million Baht and why can't a mortgage be the same length as a car loan, there's no reason at all.

 

But just to point out, I haven't made any statement of my own, I've said all along that I have relayed second hand information by way of an example, YOU are the one who has said it's all impossible and have been aggressive and abusive, just so you understand why I'm pursuing the facts here. 

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There is a certain amount of this Debt that is taken over by a " Guarantor " ( usually a family member ) at the onset of the original Loan Agreement.

Many of these ' Guarantor,s " will take on the Debt repayment upon default, and restructure the payment amounts to the person / s to which the Loan is issued.

Sometimes these  loans will take Forty Years or more to pay off, with the children of the original receiver having to keep paying upon their Death.

The Loan still appears to be being paid, so is not an NPL, although the original recipient of the Loan defaulted.

Ever wondered why second hand cars are so expensive in Thailand.

Its because the Owner usually defaults on the Loan, and has to sell in order to pay back the Bank.

And the cost to you is inclusive of the Interest amount outstanding to the Bank, plus the actual cost of the Car, plus a little left over to save face.

 

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34 minutes ago, CGW said:

I have, I had a five year mortgage on a new build in Pattaya about 20 years ago, it was for 1 million if I recall correctly.

I will bet that your situation would be quite rare in this day and age...especially for Thais.  And new builds certainly haven’t been selling for ฿1,000,000 in CM for a looooong time.  I lived there from 2012-2017 and a close friend was in property management working for a large developer.   I’m very familiar with the market and have always been a “real estate geek”.

 

What set this all off was Saengd’s claim that NPL’s at 3% is low and how accommodating the banks can be, followed up with hazy numbers that don’t add up in most cases.  If one wants to present numbers to try to bolster their claims, then all numbers should be provided.  GIGO
 

If he knew how long his BILs mortgage was extended for, and wants to use that as an example, surely (assumably) he would have known what the original terms were.  It will be quite convenient for him/her to come back and say...Yup...it was a 5 year loan extended to 13...yeah...that’s it.  Please.
 

FWIW, at the end of the GFC, the NPLs in the US were a little over 5%

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31 minutes ago, Airalee said:

I will bet that your situation would be quite rare in this day and age...especially for Thais.  And new builds certainly haven’t been selling for ฿1,000,000 in CM for a looooong time.  I lived there from 2012-2017 and a close friend was in property management working for a large developer.   I’m very familiar with the market and have always been a “real estate geek”.

I don't remember all the details now, believe the house cost was 2.2m for a basic unit, I borrowed 1m, main reason I did borrow was I wasn't a 100% sure that the developer was Kosher, they were, that was a good house rented out for years at 30k a month! Sold it 7 years ago - should have kept it.

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Why would a 1 mill. mortgage be so rare and why should the term be any longer than 5 years?

 

The landowner near to where I live builds houses that he rents or sells, each is sited on a plot that is between 100 and 150 talang wah, the units are two bed modern bungalow style, he sells them for about 2 to 2.5 mill. each, he tells me his build cost is under 800k, land sells for between 10k and 15k a talang wah. So in round numbers he's got 1 million invested in the house and it's way way way nicer than BiL's shack. That house is no different from thousands of other houses in the the North of Thailand so I estimate there must be tens of thousands of mortgages valued under 1 million baht dating back many years, spcially in the secondary market.

 

BTW I resent that you suggest I have no integrity, I said you'd have to take it at face value and if I'm wrong I will admit to being so. 

 

Yes, NPL's are low by international standards and yes, Thai banks will accommodate borrowers in many cases rather than end up owning the assets they were trying to finance. And no, I wasn't trying to supply detailed supportive evidence I was supplying, as said several times, anecdotal evidence to support my statement, second and third anecdotal evidence, as also stated several times. The numbers don't add up because you don't think they are possible and in your world they probably aren't. But in a Thai world in Thailand they almost certainly are, they would have to be given the relatively low price of real estate.

 

 

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