Thailand Eases Loan-to-Value Rules to 100%, to  Jumpstart USD 486 Billion Debt-Laden Property Sector

• 23 April 2025
• Property Focus
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Thailand’s central bank has announced a major relaxation of mortgage lending rules, raising the loan-to-value (LTV) ratio to 100% for all housing contracts beginning May 2025 through June 2026—an aggressive intervention aimed at reviving the nation’s sluggish real estate sector, which continues to reel from oversupply, weak demand, and soaring household debt, according to World. thaipbs, published on March 20, 2025.

Previously, the LTV ratio was capped between 70% and 90%, meaning borrowers could only secure loans for up to 70–90% of a property’s value. The recent change raises the LTV cap to 100%, allowing borrowers to finance the full value of a property without needing a down payment. This is considered a relaxation because it removes barriers for buyers, making it easier to access loans and purchase homes.

By increasing the LTV ratio to 100%, the Bank of Thailand aims to stimulate the struggling real estate sector, which faces oversupply, weak demand, and high household debt. This measure is designed to encourage home purchases and reduce excess housing inventory while posing minimal risks to financial stability.

Despite signs of macroeconomic recovery, the Thai property market remains under pressure, with home loans in 2024 declining by 13.4% year-on-year to THB 587 billion (USD 17.46 billion), while nationwide residential property transfer values fell 6.3%, according to the Government Housing Bank. The move comes against the backdrop of exceptionally high household debt, which as of September 2024 stood at THB 16.34 trillion (USD 486 billion), representing 89% of the country’s GDP, one of the highest ratios in Asia and a significant drag on private consumption and growth. Finance Minister Pichai Chunhavajira underscored the urgency of sector revitalisation, noting, “This engine is large and hasn’t been fully operational for over 10 years.”

In addition to LTV rule adjustments, the government is also planning to reintroduce a reduced transfer and mortgage registration fee, previously cut to just 0.01% for homes valued up to THB 7 million (USD 208,395), a policy that expired last year.

Pichai further revealed that the ministry is exploring options to manage small-scale non-performing loans under THB 100,000 (USD 2,977), focusing on consumer debt restructuring with minimal fiscal impact. While acknowledging that the overall impact on economic growth might be limited, the central bank maintained that the current tight lending environment and cautious financial institution behavior would safeguard against systemic risks.

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