Moody’s believes the new mortgage-lending rules announced by the Bank of Thailand (BOT) are credit positive because they will help to reduce speculative buying and require banks to focus on borrowers with better credit quality.

The ratings firm expects the measures to improve the asset quality of banks’ newly originated mortgages, it said on Monday.

The BOT on October 4 announced measures to tighten credit underwriting standards in mortgage loans.

Under the new rules, the maximum loan-to-value (LTV) ratio will be restricted to 80 per cent on new mortgages for homes worth more than Bt10 million.

The same LTV restrictions will apply for the purchase of a second home, irrespective of the property value.

Banks will also be prohibited from providing advances that exceed the value of a property.

Moody’s said that amid Thailand’s prolonged low interest-rate environment, property prices had been rising steadily.

According to the Bank for International Settlements, residential property prices in the Bangkok area have increased 49 per cent in the past 10 years. Nevertheless, the increase in condominium prices has been sharper at about 78 per cent during the same period.

In addition, banks’ credit underwriting standards for mortgage loans have deteriorated because a greater proportion of newly originated mortgage loans have higher LTV and lower debt-servicing capacity.

TCRB EXPANDS REACH IN MICRO-BANK SEGMENT

Thai Credit Retail Bank (TCRB), a specialist in the micro-bank segment, is gearing up to elevate its brand profile and expand its reach to a greater number of customers.

TCRB offers innovative products and services designed to meet the needs of small businesses and entrepreneurs throughout the country under its vision of being “The Best Micro Bank in Thailand”, chief executive officer Winyou Chaiyawan said on Monday.

Managing director Roy Agustinus Gunara said TCRB was now gearing up for greater growth by reaching out to even more underserved customers across Thailand who can benefit from the bank’s approach.

TCRB has over 300 branches and will expand its network to more than 500 by the end of next year.