Finance Minister Apisak Tantivorawong said measures to stimulate Thailand’s sluggish property sector will be enacted soon with hopes of reviving its fortunes. The main goal of the new measures will be to improve mortgage approval rates.
Three real estate associations and major developers recently proposed tax incentives to help boost the property sector to the new team of economic ministers led by deputy prime Minister Somkid Jatusripitak. Theses incentives included cutting housing transfer fees from two percent to 0.02 percent and mortgage fees from one percent to to 0.01 percent for housing units that cost THB2 million or less.
However, Apisak stated that waiving the transfer and mortgage fees is not the main issue affecting the property sector at the moment. He believes mortgage approvals are more important, as rejection rates by financial institutions are high at the moment. “I’ve asked GH Bank to consider lending to those who have been refused by commercial banks, but they must not be too poor,” Apisak said.
According to The Bangkok Post, mortgage rejection rates at some banks have increased to 35 percent which is up from the rejection rate of 25 to 30 percent that occurs normally during a positive economic climate. As household debt has increased and debt-servicing ability of individuals has decreased, banks have tightened loan approvals to avoid taking on non-performing loans.
There have been quite a few economic stimulus measures aimed at revitalising the country’s weak economy implemented by Somkid and his economic team, since being put in charge last month. The cabinet approved them quickly in hopes of a quick turnaround. Some early plans were designed to help out rural residents and small and medium-sized enterprise owners, while others targeted at boosting private investment are set to be implemented soon.
