Developers expect the residential market in 2023 to slog down with the expiration of the eased loan-to-value (LTV) limits on Dec 31, 2022, as homebuyers will need a higher amount of savings to buy a unit when using a mortgage.
Under the normal LTV regulations, prospective homebuyers using a mortgage are required to make a down payment of 10-20% of the home value for units priced 10 million baht and higher.
If this is their first mortgage and the unit is valued at less than 10 million baht, the loan can be approved for up to 100% of the home value.
If the unit's value is higher than 10 million baht, the mortgage limit is 90% of the home value.
However, if it is the applicant's second mortgage, the mortgage limit is 80-90% of the home value, while it is 70% for the third mortgage.
According to the Bank of Thailand, the LTV measures aim to keep home loans at an appropriate level and prevent homebuyers from racking up too much debt, as well as to prevent speculation in the property market.
Many developers believe the resumption of normal lending rules in 2023 will cause the residential market to decline by 10-20% from 2022 as homebuyers may take time to accumulate savings before buying a house.
