Demand for consumer loans is expected to rise in the third quarter of 2026, driven primarily by household liquidity needs, according to the Bank of Thailand’s latest survey.
The central bank’s credit condition report for the second quarter shows financial institutions anticipate stronger household credit demand in the third quarter, particularly for credit cards and other consumer loans.
“The rise is expected to stem from increased liquidity needs among households. However, high household debt levels have prompted lenders to remain cautious in extending credit, particularly unsecured loans,” the report noted.
Despite the stronger outlook for household loan demand this quarter, auto loans are expected to continue declining, especially for internal combustion engine (ICE) vehicles.
The survey gathers insights from senior lending executives at bank and non-bank financial institutions and covers credit demand, supply, and forward-looking trends to give a comprehensive picture of market developments.
Household loan demand fell across all categories in the second quarter, reflecting subdued consumer confidence amid rising living costs.
Concerns over income and employment prospects dampened loan demand in the household segment.
The electric vehicle (EV) market was a notable exception. Despite an overall dip in auto loan demand during the second quarter, credit demand for EVs, hybrid EVs and plug-in hybrid EVs rose as consumers switched from ICE vehicles to EVs amid elevated oil prices caused by war in the Middle East.
The survey found several financial institutions tightened lending criteria for both corporate borrowers and small and medium-sized enterprises (SMEs) during the second quarter. These tighter conditions were driven by concerns over credit quality, particularly among businesses affected by geopolitical conflicts.
For example, some banks raised borrowing fees for large corporations and adjusted margins for SMEs.
Banks expect corporate loan demand to pick up in the third quarter, while SME loan demand is projected to dip slightly in the agricultural sector, though the outlook across other industries remains more favourable.
During the second quarter, corporate loan demand rose mainly to fund working capital for exports. Borrowing also increased for digital infrastructure and data centre projects, in line with the global technology and artificial intelligence expansion cycle.