Corona virus is spreading like wildfire in China and its neighboring countries and beyond. Thailand has cut its benchmark interest rates as it seeks ways to try to ease the impact of measures the outbreak of a virus that has killed at least 560 people. The interest rates for almost all types of loans have been affected. From mortgage to personal loans and business loans and so on, the rates are being lowered to enable people pay and to reduce the number of defaulters.
Thai authorities have the Bank of Thailand, on Wednesday cut its main policy rate by 0.25%. As at now, the rates have been lowered from 1.25% to 1%. This also includes mortgage rates, which Thailand has also reduced by 0.25% try to and ease the terms for new mortgage seekers and to also ease the pressure on those who are serving their mortgages.
Thailand’s board of investment noted that the spread of the novel corona virus that broke out in late 2019 could have an adverse effect on market sentiment and economic activity in coming months. The board has announced new measures as an attempt to boost the economy, including the increase of corporate tax exemptions for large-scale projects and for small businesses.
Thai authorities have already taken various measures to ease conditions for both small businesses and larger corporations. Some of these steps include tax cuts, extending the deadline for filing the income tax to June from arch, and easing loan repayment terms.
The Bank of Thailand said that the softer credit policy such as lower mortgage rates would help households and businesses cope as the risks from uncertainties and mounting debts brought out by the effects of corona virus.
Analysts are further predicting that if the virus continues to spread, and more cities and businesses are shut down, then Thai central bank will be forced to the benchmark interest rate by another 0.25% point, and this could happen as soon as March.
Since more than 10 percent of Thailand’s economy hinges on the exports to China, the outbreak is definitely having an adverse effect on its economy. The people in charge cannot pretend to be holding the earlier rates while they are fully aware that many people are out of business right now.
Why is it necessary for mortgage rates to be lowered in Thailand?
In respect to the outbreak of corona virus, many people in Thailand are affected in one way or the other. For example, people who export their commodities to China, especially to the cities that have been shut down, are literally out of business. Some of these people had mortgage loans that they were servicing but they now cannot pay. To help ease the pressure and to reduce the number of defaulters, the mortgage rates have been lowered.
Besides, the transport sector has also been adversely affected. Businesses and people who depend on transport sector are being affected by the outbreak and are struggling to server their loans.
More about corona virus’ effect on economy in Bangkok Post.