Thailand Development Research Institute (TDRI) has expressed concern that low income-earners who bought housing units under the government-sponsored “One Million Housing Units” project may not be able to pay their instalments once the initial period of low interest rate charged on their housing loans expires and they will have to start paying floating interest rates.

TDRI senior researcher Mrs Jiraporn Phlangpraphan said yesterday that the floating interest rates in the wake of interest rate increase might double interest rate payment for each monthly instalment, increasing financial burden on the housing unit buyers and potentially making them unable to service their housing loans.

She pointed out that TDRI had previously conducted studies on the housing problem of low-income rural inhabitants and found out that many of them were unable to service their housing loans after a certain period because of insufficient income.

Instead of applying floating interest rates after the expiration of the first three years of fixed interest rate charged on the housing loans, Mrs Jiraporn suggested a step-by-step interest rate increase which would give some breathing space to the debtors.

Initiated by the government to help low-income earners and working people who do not have a housing unit of their own, the project is funded by the Government Housing Bank, with each buyer to be provided a maximum of one million baht in housing loan.

For those who earn less than 25,000 baht a month, a fixed interest rate of 3 percent Is charged for the first five years after which they will be charged an interest rate of MRR-1 percent for the rest of the contracts.

For those who earn more than 25,000 baht a month, a fixed rate of 3 percent is charged for a period of 1-3 years after which the interest rate will be adjusted to MRR-1 for the rest of the contracts.