Although the State Bank of Vietnam has repeatedly warned banks, particularly, commercial joint stock banks of offering real-estate loans, facing up the hot growth of the real estate market, banks cannot miss such opportunity to pump capital into real estate when output for banks’ capital is being tightened because the central bank’s recent monetary tightening policies.
Key products of banks are almost instalment loans to consumers. According to a representative from the An Binh Commercial Joint Stock Bank, the value of an apartment now amounts up to billions of dongs, clients find hard to have such huge amount of money to pay for home sellers at the same time. Thus, An Binh has introduced to the market a series of products, meeting demands of different clients and efficiency is very high. By December 25, 2007, total real estate loans of An Binh was 1.2 trillion dong out of total outstanding loans of 6.3 trillion dong at An Binh by the end of December 2007.
Not only An Binh but also almost other commercial joint stock banks are now offering real-estate lending products, part of which are listed to be consumer loans. For example, for loans to home reparations, the HCM City Housing Development Bank supports up to 70% of value of mortgaged houses. Meanwhile, the Vietnam Export and Import Commercial Joint Stock Bank lends up to 70% of value of mortgaged loans or less than 90% of value of savings books within 10 years, based on different demands and payment capacity of clients.
According to Nguyen Dinh Tung, vice general director of the Vietnam International Bank (VIBank), as for any kind of credit forms, banks always have strict management measures before handing over capital to borrowers. Regarding real estate credit, VIBank always has a certain credit amount in order to strictly manage capital safety.
However, Tung said it is now very difficult to exactly define real estate credit because for home purchase, reparation loans are considered to be consumer credit. This is the necessary demand for the market, which should be encouraged.
With the attraction of the real estate market, the securities credit tightening policy has not yet been loosened, banks’ capital is striving to dodge into the home market. According to a senior official of the central bank-HCM City branch, the real estate lending balance for southern banks is sharply increasing by the end of the year, which is approximately 10% out of total outstanding loans of the whole banking system. If being careless, real estate loans are even more risky than securities credit because real estate loans are huge, the payment time is long, up to tens of years.