BANGKOK – Thailand’s state planning agency has raised red flags over mortgage borrowers after new figures showed a massive jump in homes being foreclosed on for non-payment and being seized by the banks and sold at auction.
Ms. Onfa Vejjajiva, secretary-general of the National Economic and Social Development Council (NESDC), said data from the Real Estate Information Center showed that in the second quarter of 2025, seized residential properties listed for auction reached 67,600 units. This was a year-on-year increase of 210%.
She noted that household debt risks are especially severe for families hit by flooding, with those in the farming sector facing the most pressure. According to Ms Onfa, the top priority is to help mortgage borrowers before their cases move into the legal foreclosure process, so that they have a chance to keep their homes.
The second priority is to widen access to credit for households affected by floods. She pointed to support from the Bank for Agriculture and Agricultural Cooperatives, which has launched several loan schemes.
These include a 20 billion baht emergency credit line, giving each borrower up to 50,000 baht at 0% interest for the first six months, along with rehabilitation loans of up to 500,000 baht per household.
Ms Onfa said one factor behind the surge in seized and auctioned homes is excess housing supply, which has been worsened by poorly timed investments and property speculation.
Debt restructuring and mediation
A study by the Bank of Thailand found that even after auctions are completed, many borrowers do not escape their debts. In some cases, they still face further asset seizures or asset freezes. The study showed that one-third of borrowers in foreclosure cases remain stuck in long-term debt problems.
She stressed that borrowers need support before their cases reach legal enforcement so that the social and financial impact of losing their homes is reduced. Helpful steps include debt restructuring and mediation, both before and after court proceedings.
At the same time, the NESDC assessed the economic effect of this year’s floods under three scenarios. In the best case, total damage is estimated at 18 billion baht, which would trim GDP growth by 0.1 percentage points.
Under the base-case scenario, damage would reach 23 billion baht and cut GDP by 0.13 percentage points. In the worst case, losses are projected at 29 billion baht, with a hit to GDP of 0.16 percentage points.
Household debt in Q2
NESDC figures show household debt in the second quarter stood at 16.3 trillion baht, down 0.3% from the previous quarter. The decline followed stricter lending standards and pushed the household debt to GDP ratio down to 86.8%, continuing the fall that began in the first quarter of 2024.
Most loan categories shrank, except for housing loans, which grew by 1.7%. This increase partly reflected earlier policy moves, such as more relaxed loan-to-value measures and lower fees for mortgage registration and property transfers.
Auto loans dropped 9.6%, credit card debt fell 2.6%, and supervised personal loans edged down 0.2%.
Credit bureau data showed that non-performing loans (NPLs), defined as loans overdue by more than 90 days, reached 1.24 trillion baht in the second quarter. NPLs accounted for 9.11% of total loans, up from 8.78% in the first quarter. Every loan type reported higher NPL levels.
By contrast, loans overdue by one to three months, known as special mention loans, decreased from 4.25% in the first quarter to 3.18% in the second quarter. These declined across all loan categories. The NESDC said this reflects ongoing debt restructuring by financial institutions and suggests that bad debts could start to fall in the coming periods.
Study on VAT increases
The NESDC also reviewed experiences with value-added tax (VAT) increases in other countries, including Japan, the UK, and Singapore. For Thailand, the council’s planning unit warned that a future VAT rise may be hard to avoid, given rising government spending and public debt. Public debt currently stands at 64.8% of GDP and is projected to climb to 68.2% by 2030.
Ms Onfa noted that many governments use extra VAT revenue, sometimes called goods and services tax, to support lower-income groups. Singapore, for example, uses higher VAT income to expand welfare benefits. Japan directs part of the extra revenue to help low-income pensioners and to raise pay for elderly care workers.
Some countries apply more than one VAT rate. Japan, for instance, charges 10% on general goods and services and 8% on essential items. Singapore uses a single VAT rate. Many governments also raise VAT in stages toward a target rate. They usually announce changes at least a year in advance so people and businesses have time to adjust.
In certain countries, extra measures soften the impact of higher VAT. Japan has offered subsidies to homebuyers as one support tool.
If Thailand were to raise VAT by one percentage point, NESDC estimates that the state would collect an extra 70 to 90 billion baht each year. That sum would be enough to cover the 90 billion baht annual elderly allowance, the 50 billion baht state welfare card scheme, or the 17 billion baht yearly child support programme.
However, Ms Onfa said any VAT rise must align with the pace of recovery in domestic consumption. Based on current projections, she believes Thailand is not yet in a position to increase VAT.
She added that the government’s medium-term fiscal framework already lists potential VAT adjustments as part of its long-term strategy.
