Ten-year peak for household debts

Ten-year peak for household debts

A recent survey has found a record-high household debt among Thai people but most of them depend on formal loans.

Household debt has risen to a 10-year high of almost 300,000 baht a family while the average repayment burden of informal loans has dropped by 46%, the University of the Thai Chamber of Commerce has found from its survey.

UTCC president Sauwanee Thairungroj said on Thursday the survey on 1,191 people sampled nationwide from Sept 26 to Oct 10 showed that the average household debt rose to 299,266 baht from 298,005 baht last year.

The increase was mainly due to purchases of durable goods and lower incomes. Also contributing were the higher cost of living, school tuitions, purchases on instalments, credit-card spending, layoffs, disaster-damaged farm products and football gambling.

The average repayment burden of household debts stood at 15,438 baht a month, including repayments for informal loans at 5,512 baht, down 46.33% year-on-year due to suppression on loan sharks.

Solvent people made up 8.9% of the respondents, the smallest proportion in 10 years, Mrs Sauwanee said.

The survey also found that 79.3% of indebted people defaulted at some point due to expensive goods, economic problems, flooding and the high cost of living.

Of the respondents, 70.7% did not need more loans next year as they expected the economy to recover. The rest, 29.3%, would borrow more for general spending, repayment of old debts, asset purchases and investment in occupation. Most of them would go to formal lending sources.

The respondents asked the government to solve the household debt problem by reducing the cost of living, expanding welfare on medical treatment and access to finance, reducing loan interest rates and creating more jobs.