Home loan interest rates simultaneously increase

08-Aug-2020 Intellasia | Thoi bao Ngan hang | 6:50 AM Print This Post

Market observation showed that from the second half of July 2020 until now, the interest rates of home loans at commercial banks have tended to decrease significantly. The largest decrease was recorded in the groups of state-owned banks and 100 percent foreign-owned banks.

Specifically, at commercial banks such as Standard Chartered, UOB, HongleongBank, HSBC and Shinhanbank, the average interest rate of home loan packages is ranging from 6.49 percent to 8.8 percent per annum for a period of one to three years. In the following years, the additional rate is 1.5 3.9 percent per annum based on the deposit interest rates for terms from six months to two years, fluctuating from 10 to 1.5 percent per annum. The borrowing terms are from 20 to 25 years.

Meanwhile, at Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), the home loan interest rates were cut by 0.2 to one percent per annum for different terms from the end of July 2020. Specifically, the preferential interest rate was lowered from eight percent to 7.8 percent per annum on 12-month term, from nine percent to 8.8 percent per annum on 24-month term. By the end of the preferential period, the average lending rate is 10/1 percent per annum, on a borrowing period of 20 years.

At Vietcombank, home loan interest rate was cut from 8.1 percent to 7.7 percent per annum for a preferential term of 12-month. Particularly, Vietcombank provides seven interest rate options so that home buyers can take the initiative in calculating loan plans.

For the group of private joint stock banks, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) made the largest interest rate decrease to home loan packages. Accordingly, the bank stimulates home loans with a long term of 35 years with preferential interest rate of only 8.29 percent per annum in the first year. after the preferential period, loans of over five billion dong are offered an attractive rate of 10.8 percent per annum.

Other banks such as Military Commercial Joint Stock Bank (MB), Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam Prosperity Commercial Joint Stock Bank (VPBank) and Vietnam International Commercial Joint Stock Bank (VIB) also simultaneously apply 12-month preferential interest rates for home loans at 7.7-10.1 percent per annum. After the preferential time, the rates are adjusted to about 11-15 percent per annum.

More small apartments more opportunities of home ownership

According to experts, the sharp interest rate decline to the lowest level in more than 10 years has created conditions for many people to realise their dream of settling down. Banks’ interest rate cut for home loans is mainly to strive to promote credit targets, because the capital demand for production and business activities is currently not high due to the impact of the Covid-19. Meanwhile, banks still prefer home loans because they are secured and less risky than business loans at the present time.

However, the current biggest obstacle is that the housing prices are still relatively high compared to people’s incomes even when the unpredictable Covid-19 pandemic has caused purchasing power to plummet. Therefore, even when the interest rate level has fallen sharply, it is not enough to encourage people to make purchases.

Nghiem Thanh Nguyen, a real estate broker in District 2 calculated that the average price of apartments in District 2 and District 9 is currently 2.5 three billion dong for new apartments with two bedrooms. At this price, even couples who earn up to 30 million dong per month still find it hard to afford, even with a bank loan.

Thus, analysts believed that the massive interest rate cuts of banks are still not sufficient to stimulate people with residential housing needs but mainly those with capital demand for real estate investment. In fact, statistics of many real estate floors from early Q2 2020 until now pointed out that the number of searches for mini apartments (area of about 45 square meters) increased strongly by over 200 percent compared to the previous quarter. It showed that the demand for apartments with price of less than two billion dong per unit is increasing rapidly. Meanwhile, the supply of this type of apartments in this market is still very limited.

Thus, if localities, especially big cities like Hanoi and HCM City can boost the supply of small apartments, social housing and commercial housing for low-income people, in the next one or two years, the home loans will grow strongly and substantially support the need to buy residential housing of young households.


Category: Finance, Vietnam

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