Housing Finance Mechanism in Thailand: An Overview of Formal, Semi-formal and Informal System

Abstract

The research aims to study the overview and problems of housing finance mechanism in Thailand, and to make recommendations for its future development. Documentary research methods were applied for the research, including data gathering from various relevant sources and participation of meetings. Content analysis and the CATWOE technique were applied in the research for data analyses. The research reveals that there are three main systems of housing finance mechanisms in Thailand: formal, semi-formal, and informal.  The three systems differ in terms of lenders’ characteristics, funding sources, lending targets, and loan conditions. The main problems of housing financing are: (a) insufficient loans for all house buyers’ demand; (b) credit terms which exclude many people; and (c) household qualifications that do not meet the banks’ requirements.  The major recommendation is that the government should issue a savings promotion policy that integrates all three systems of housing finance mechanisms, starting from household- savings level.  It should develop a long-term housing loan system, with special terms and conditions.  It should also initiate measures for housing development, either as rental or rent-to-buy, with cooperation between local authorities, the private sectors, and communities. This research contributes to the making of housing policy that allows access for all to loan sources for affordable housing.