The Bank of Thailand has announced a temporary relaxation of loan-to-value (LTV) regulations effective from May 1, 2025, until June 30, 2026, in response to ongoing challenges within the real estate sector.

This decision aims to address the significant slowdown in property sales, exacerbated by high levels of household debt and an oversupply of housing.

Somchai Lertlapwatanakoset, Assistant Governor of the Financial Institutions Policy Group at the Bank of Thailand, highlighted that the property market has been continuously stagnant with no clear signs of recovery.

This assessment follows discussions with industry stakeholders and financial institutions, as well as input from the Monetary Policy Committee and the Financial Institutions Policy Committee.

The authorities deemed it necessary to ease LTV constraints to help stabilize the real estate sector and related businesses, potentially mitigating the issue of excess supply and providing some economic stimulus.

The temporary adjustments to the LTV guidelines entail:
1. A ceiling for the loan-to-value ratio set at 100% for residential loans under specific conditions, including:
(1) Properties valued under 10 million Baht starting from the second loan agreement onward.

(2) Properties valued at 10 million Baht or above, applicable from the first loan agreement onward.

2. The relaxed regulations are applicable solely to loan agreements signed within the specified timeframe, from May 1, 2025, to June 30, 2026.

The Monetary Policy Committee believes that the current tightening financial conditions and cautious lending practices from financial institutions should prevent an increase in risks to the financial system.

The officials emphasized that Thailand's existing LTV regulations are already more lenient compared to international standards, reinforcing the importance of maintaining lending standards to mitigate risks for borrowers and ensure overall financial stability against potential real estate speculation.