MORTGAGE RATES

Financial institutions in Thailand establish fixed and floating rate home mortgage loans:

1) Floating rate loans
Floating rate loans feature interest rates that may con tinuously change over a loan term. New interest rates are usually dependent on money market rate adjustments or changes in a determined re ference rate.

Specifically, ‘Reviewable Rate Mortgages’ or ‘Variable Rate Mortgages’ are loans with interest rates that can be adjusted at any time.‘Adjustable Rate Mortgages’ refer to mortgage interest rates that are periodically adjusted to a reference rate such as a government bond. In Thailand, floating rate loans refer to loans that are adjusted to changes in the ‘Minimum Lending Rate’ (MLR) or ‘Minimum Retail Rate’ (MRR). Floating rate home loans are normally equal to or plus or minus MLR/MRR rates depending upon the liquidity in the financial system, market demand for funds and the bank’s competitive policies.

During the past three or four years, home loan interest rates were below MLR because banks were competing fiercely for housing loans.Floating rate home loans during the period carried lower interest rates than mostother bank loans.

2) Fixed rate loans
Interest rates on fixed-rate loans are fixed over the loan’s contracted period (20-30 years). Fixed rate loans generally are constant payment, fully amortizing loans, repayable through equal monthly payments of principal and interest. Presently, no financial institutions in Thailand offer long term fixed rate loans similar to those offered in other countries (e.g. 30 year fixed mortgage loans are common in the USA). The Government Housing Bank currently offers the longest five-year fixed rate mortgage loan in Thailand.