Following the latest meeting of the Monetary Policy Committee (August 8, 2018), a decision was made with a vote of 6 to 1 to maintain the policy interest rate at 1.5% per annum to support ongoing economic growth. At the same time, there is a trend of predictions from experts and economists in the financial sector suggesting that the Bank of Thailand may raise the policy interest rate by 0.5% to 2% in 2019 due to various related factors. This period may be the last opportunity for consumers to borrow for home purchases at a low-interest rate, as future rates are expected to rise.

           TerraBKK  has observed that commercial banks in Thailand are beginning to prepare for the changing interest rate trend. For example:

           SCB (Siam Commercial Bank): has increased home loan rates by about 0.05% (in some campaigns) since the second quarter, in line with the rising interest rate trend. Most customers tend to refinance their homes after three years, necessitating an interest rate adjustment. It is believed that this will not impact the expansion of loans to new customers, as the demand for housing loans continues to grow well.

           Kasikorn Bank: is increasingly adopting floating interest rates in line with the rising interest rate trend, initially offering lower rates and still providing fixed-rate campaigns for the first three years. However, the strategy will primarily focus on offering floating rate campaigns, as the average floating rate is lower than the fixed rate.

           Krungsri Bank: is expected to start raising interest rates by 0.05-0.20% or 5-20 satang from the normal home loan rates in August, in line with financial costs, after the bank has offered fixed-rate home loans for three years at rates below 3%.

           TMB Bank: has raised interest rates on special deposit accounts, such as TMB Exclusive for a 9-month term, to 1.35% (up from 1.25%). This is based on the belief that the rising interest rate trend has been in effect since mid-2018, resulting in an average increase in special deposit rates across the system to 1.40%, up from the current 1.30%.

           Thanachart Bank: has currently adjusted to floating interest rates for nearly all campaigns, as it anticipates that rates will begin to rise from the third quarter onwards. The lowest floating rate offered by Thanachart Bank is 3.4%, which is still lower than many commercial banks at present.

           While some banks are still waiting to see how the situation unfolds, TerraBKK believes that further interest rate increases are inevitable. TerraBKK has compiled loan interest rates from 30 commercial banks both from Thailand and foreign branches as of August 9, 2018. Details are as follows:

Note:
• MOR (Minimum Overdraft Rate) is the minimum interest rate charged to high-quality corporate clients for overdraft facilities (O/D) for business circulation.
• MLR (Minimum Loan Rate) is the minimum interest rate charged to high-quality corporate clients suitable for long-term loans.
• MRR (Minimum Retail Rate) is the minimum interest rate charged to high-quality retail clients.


Article by: TerraBKK Investment Tips
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