The Bank of Thailand (BoT) has trumpeted its success in helping pandemic-hit borrowers consolidate their debt, with its latest move designed to further ease their repayment burdens.
The BoT will now support individuals in consolidating their mortgage and retail loan debt held at different lenders into a single institution via refinancing. Previously the central bank supported such debt consolidation only within individual financial institutions from which customers had borrowed.
Now either retail or mortgage loans taken out from different lenders can be transferred from one institution to another, or both can be moved to an entirely different lender.
After the loan consolidation, the central bank sets the interest rate ceiling for unsecured retail debt, like credit cards and personal loans, at no more than the mortgage rate used after the teaser rate expires, plus no higher than 2% per year.
The BoT expects to see most financial institutions offering the debt consolidation packages to customers by next month, according to Oramone Chantapant, deputy director of the BoT.
She said the central bank wants to see customers with good credit records and those affected by the pandemic able to easily access financial packages that could ease their debt burden.
Interest rates for mortgages are currently based on the minimum retail rate, or the minimum home loan lending rate of around 6-8% per year. The maximum interest rate for personal loans is 25% per year.
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