Residents’ financial habits and high debt levels are becoming the main reasons for housing loan rejections. In Thailand, mortgage loan denials have increased significantly.
The main reasons for this decline are less about low incomes and more about borrowers’ financial habits and overall debt levels. According to the Government Housing Bank of Thailand (GH Bank), poor financial discipline and high levels of consumer debt make it difficult to obtain housing loans. Kasem Parephan, regional manager of GH Bank’s Western branch in Bangkok, reported that only 40% of mortgage applications were approved in the first two months of this year.
This data highlights the growing financial challenges in Thailand’s housing market. The population’s weakened purchasing power is exacerbated by stricter credit assessments, even amid government efforts to stimulate demand for real estate. Mr Kasem identified three key reasons for application rejections: high levels of consumer debt, insufficient or unclear income documentation, and financial behaviour that raises doubts about the borrower’s discipline. Consumer debt remains the most significant obstacle. Many applicants are already burdened with numerous financial obligations that prevent them from servicing an additional home loan.
Another problem concerns applicants who cannot provide reliable proof of income. This is especially true for small business owners and workers with multiple income streams, whose income cannot always be clearly verified. A third factor is becoming increasingly important among younger borrowers, particularly freelancers, online sellers, and the self-employed. Their bank statements often show inconsistent cash flows and limited savings.
According to GH Bank, many applicants, despite having sufficient income, fail to demonstrate stable financial models that meet credit criteria. This significantly reduces their chances of mortgage approval. This suggests the Thai mortgage market is gradually moving away from a purely income-based approach to assessing borrowers, shifting the focus to a more thorough examination of their financial behaviour and payment regularity. Tripecha Tangmatitham, managing director of Supalai, a development company listed on the Stock Exchange of Thailand, noted that mortgage refusals are becoming an increasingly pressing issue, despite relatively stable housing demand.
This year, Supalai’s mortgage refusal rate has risen to 17%, compared to 15% last year. Meanwhile, the company continues to outperform the overall residential real estate market in sales volume. “Many consumers underestimate how everyday borrowing impacts their mortgage applications,” said Mr Tripecha. “Of particular concern are ‘Buy Now, Pay Later’ (BNPL) services, which are becoming increasingly popular among younger consumers.” Many consumers mistakenly believe that small late payments won’t impact future mortgage applications, as their outstanding balances seem insignificant. However, banks consider every payment record when assessing borrowers’ financial discipline.
This means that even minor payment delays can weaken their creditworthiness. According to Mr Tripecha, improved financial literacy could reduce loan refusal rates by raising consumers’ awareness of how short-term borrowing affects their long-term financial options. Sahatchai Kwan-chiyen, senior vice president of project investments at Harrison, noted that demand for residential real estate hasn’t disappeared. Still, many potential buyers can no longer secure sufficient funds to purchase homes at current prices. As a result, developers are increasingly lowering asking prices or selling completed units wholesale to investors and agents to match buyers’ credit capabilities.
During the coronavirus pandemic, Harrison formed groups of domestic investors to purchase condominiums wholesale after many initial buyers could not secure mortgages due to pay cuts or job losses. The company then resold these units at lower prices, helping financially qualified buyers access housing at more affordable levels. According to Harrison, today’s market is constrained less by demand than by financing options. SET-listed company Sena Development also believes that improving borrowers’ financial preparedness has become just as important as stimulating sales. “Developers are increasingly required to help clients prepare financially, rather than simply focusing on closing deals,” said Kessara Thanyalakpark, managing director of Sena Development. The company has expanded its LivNexT program, which allows clients to rent completed homes before purchasing them, while simultaneously building a payment history that can strengthen future mortgage applications.
Rent payments can subsequently be converted into a portion of the purchase price, and clients undergo financial assessments every six months during the program. This initiative aims to improve borrowers’ financial profiles before they formally apply for a mortgage, reducing financial risk for both clients and developers. Meanwhile, GH Bank has implemented several programs aimed at applicants facing difficulties obtaining housing loans. The “Financial School” program focuses on four main groups: borrowers with previous repayment issues, freelancers, applicants without formal income documentation, and recent graduates. The bank also launched the “Financial School Extra” program in collaboration with partner developers.
Under this program, clients make monthly payments to GH Bank, which then transfers these funds directly to the developers as a down payment for up to 12 months. “We encourage participants to maintain consistent monthly payments, as the mortgage affordability assessment is based on the lowest regular payment amount demonstrated during the program,” explained Mr Kasem. Borrowers who suddenly reduce their monthly payments may inadvertently reduce the loan amount they ultimately qualify for. GH Bank has also adapted its underwriting process to accommodate changing employment patterns. Applicants, such as food vendors who receive payments via QR codes, can now use digital transaction records to verify income instead of traditional payroll documents. For musicians and other workers in non-traditional professions, bank staff can conduct workplace visits and request additional supporting information to verify income sources.
The bank notes that online vendors currently constitute one of the largest groups applying for mortgages, requiring more flexible methods for assessing business income. Despite these adaptations, financial discipline remains central to every application. Applicants looking to improve their creditworthiness are advised to pay off outstanding debts and maintain a stable financial record for at least three to 12 months before reapplying.
Residents’ financial habits and high debt levels are becoming the main reasons for housing loan rejections. In Thailand, mortgage loan denials have increased significantly. The main reasons for this decline are less about low incomes and more about borrowers’ financial habits and overall debt levels.
According to the Government Housing Bank of Thailand (GH Bank), poor financial discipline and high levels of consumer debt make it difficult to obtain housing loans. Kasem Parephan, regional manager of GH Bank’s Western branch in Bangkok, reported that only 40% of mortgage applications were approved in the first two months of this year. This data highlights the growing financial challenges in Thailand’s housing market.
The population’s weakened purchasing power is exacerbated by stricter credit assessments, even amid government efforts to stimulate demand for real estate. Mr Kasem identified three key reasons for application rejections: high levels of consumer debt, insufficient or unclear income documentation, and financial behaviour that raises doubts about the borrower’s discipline. Consumer debt remains the most significant obstacle. Many applicants are already burdened with numerous financial obligations that prevent them from servicing an additional home loan.
Another problem concerns applicants who cannot provide reliable proof of income. This is especially true for small business owners and workers with multiple income streams, whose income cannot always be clearly verified. A third factor is becoming increasingly important among younger borrowers, particularly freelancers, online sellers, and the self-employed.
Their bank statements often show inconsistent cash flows and limited savings. According to GH Bank, many applicants, despite having sufficient income, fail to demonstrate stable financial models that meet credit criteria. This significantly reduces their chances of mortgage approval. This suggests the Thai mortgage market is gradually moving away from a purely income-based approach to assessing borrowers, shifting the focus to a more thorough examination of their financial behaviour and payment regularity.
Tripecha Tangmatitham, managing director of Supalai, a development company listed on the Stock Exchange of Thailand, noted that mortgage refusals are becoming an increasingly pressing issue, despite relatively stable housing demand. This year, Supalai’s mortgage refusal rate rose to 17%, up from 15% last year. Meanwhile, the company continues to outperform the overall residential real estate market in sales volume. “Many consumers underestimate how everyday borrowing impacts their mortgage applications,” said Mr Tripecha. “Of particular concern are ‘Buy Now, Pay Later’ (BNPL) services, which are becoming increasingly popular among younger consumers.” Many consumers mistakenly believe that small late payments won’t impact future mortgage applications, as their outstanding balances seem insignificant. However, banks consider every payment record when assessing borrowers’ financial discipline.
This means that even minor payment delays can weaken their creditworthiness. According to Mr Tripecha, improved financial literacy could reduce loan refusal rates by raising consumers’ awareness of how short-term borrowing affects their long-term financial options. Sahatchai Kwan-chiyen, senior vice president of project investments at Harrison, noted that demand for residential real estate hasn’t disappeared. Still, many potential buyers can no longer secure sufficient funds to purchase homes at current prices. As a result, developers are increasingly lowering asking prices or selling completed units wholesale to investors and agents to match buyers’ credit capabilities.
During the coronavirus pandemic, Harrison formed groups of domestic investors to purchase condominiums wholesale after many initial buyers could not secure mortgages due to pay cuts or job losses. The company then resold these units at lower prices, helping financially qualified buyers access housing at more affordable levels. According to Harrison, today’s market is constrained less by demand than by financing options. SET-listed company Sena Development also believes that improving borrowers’ financial preparedness has become just as important as stimulating sales. “Developers are increasingly required to help clients prepare financially, rather than simply focusing on closing deals,” said Kessara Thanyalakpark, managing director of Sena Development. The company has expanded its LivNexT program, which allows clients to rent completed homes before purchasing them, while simultaneously building a payment history that can strengthen future mortgage applications. Rent payments can subsequently be converted into a portion of the purchase price, and clients undergo financial assessments every six months during the program. This initiative aims to improve borrowers’ financial profiles before they formally apply for a mortgage, reducing financial risk for both clients and developers. Meanwhile, GH Bank has implemented several programs aimed at applicants facing difficulties obtaining housing loans.
T
he “Financial School” program focuses on four main groups: borrowers with previous repayment issues, freelancers, applicants without formal income documentation, and recent graduates. The bank also launched the “Financial School Extra” program in collaboration with partner developers. Under this program, clients make monthly payments to GH Bank, which then transfers these funds directly to the developers as a down payment for up to 12 months. “We encourage participants to maintain consistent monthly payments, as the mortgage affordability assessment is based on the lowest regular payment amount demonstrated during the program,” explained Mr Kasem.
Borrowers who suddenly reduce their monthly payments may inadvertently reduce the loan amount they ultimately qualify for. GH Bank has also adapted its underwriting process to accommodate changing employment patterns. Applicants, such as food vendors who receive payments via QR codes, can now use digital transaction records to verify income instead of traditional payroll documents. For musicians and other workers in non-traditional professions, bank staff can conduct workplace visits and request additional supporting information to verify income sources.
The bank notes that online vendors currently constitute one of the largest groups applying for mortgages, requiring more flexible methods for assessing business income. Despite these adaptations, financial discipline remains central to every application. Applicants looking to improve their creditworthiness are advised to pay off outstanding debts and maintain a stable financial record for at least three to 12 months before reapplying.
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