BANGKOK : Thailand's central bank has further eased rules on mortgages to boost a key property sector struggling from the impacts of the pandemic, officials said on Thursday, sending property shares higher.
The loan-to-value ratio limit has been lifted to 100per cent from 70-90per cent until end-2022 to increase activity in the real estate sector, which will take years to recover, officials said. The rules https://www.bot.or.th/Thai/PressandSpeeches/Press/2021/Pages/n7564.aspx were effective on Wednesday.
"Uncertainty remains high and some sectors are still fragile, so measures have been introduced to stimulate the economy and increase jobs," Roong Mallikamas, an assistant Bank of Thailand (BOT) governor, told a news conference.
The measures will be for all housing loan contracts, including refinancing, while there is little sign of speculation in the sector, she said.
Shares in real estate developers rose 1.2per cent at the lunch break, with Origin Property up 6.5per cent and Noble Development up 3per cent.
The property sector accounts for about 10per cent of Thai gross domestic product (GDP) and employs 2.8 million people, said senior BOT director Don Nakornthab.
The BOT has forecast GDP growth of 0.7per cent this year and 3.9per cent in 2022, following a 6.1per cent slump last year.
Southeast Asia's second-largest economy is expected to return to pre-pandemic levels in early 2023, but the property sector will take much longer to normalise, Don said.
"The economy has already bottomed out https://www.reuters.com/article/idUSL1N2RA04P. But without additional measures, property sector activity is not expected to return to pre-crisis levels until 2025," he said.
"We are hoping the measures will help the property sector recover faster," Don said.
The easing of rules, together with any additional measures, are expected to increase home loans by about 50 billion baht (US$1.5 billion) per year, Don said.
The finance ministry is also considering extending some property measures to help the sector, Don said.
(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Martin Petty)