Lending rates lowered to stimulate buyers of residential homes

21-Apr-2021 Intellasia | TTXVN | 5:02 AM Print This Post

To accelerate the consumer demand in the context of the prolonged Covid-19, many banks have launched housing package with preferential interest rates from 5.9 — 8.9 percent per annum. The rate is adjusted for each term.

According to the latest information from Vietnam Prosperity Commercial Joint Stock Bank (VPBank), from now to the end of December 31st 2021, customers wishing to buy townhouses and property with ownership certificates are offered lending rates on flexible term, from 5.9 percent per annum in the first three months, 8.1 percent per annum in the first six months, or 8.9 percent per annum in the first 24 months.

“Customers can borrow up to 75 percent of the secured assets and the disbursement limit is up to 20 billion dong. VPBank supports customers with a 12-month grace period for loans with a minimum term of four years. It means that customers will not have to pay principal to the bank in the first year and only have to pay interest,” said VPBank’s representative.

When borrowing home loans at Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), customers are offered many incentives such as borrowing term longer than 20 years; accepting assets formed from loan capital, real estate, valuable papers, savings books of customers or asses of guarantors. Lending interest rate at BIDV in the first six months is 7.3 percent per annum,7.8 percent per annum in the first 12 months of 8.3 percent per annum in the first 18 months; a rate of 8.8 percent per annum fixed in the first 24 months. Compared to the same period of 2020, the medium and long-term of BIDV have declined by up to 0.4 percent per annum on some terms.

Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) has also lowered preferential interest rate in the first 36 months from 9.5 percent per annum to 9.2 percent per annum, and from 8.9 percent per annum to 8.7 percent per annum for 24-month preferential loan package. Asia Commercial Joint Stock Bank (ACB) has cut lending interest rates significantly from 9.5 percent per annum to 8.9 percent per annum, applicable for the preferential loan package for the first 12 months. Banks which are also said to offer attractive home loan interest rates in April 2021 include Standard Chartered (applying rate of 6.19 percent per annum), Hong Leong Bank (6.25%), Vietnam Public Joint Stock Commercial Bank (PVcomBank, 6.5 percent per annum). Vietnam Technological and Commercial Joint Stock Bank (Techcombank) has cut the rates from 7.29 percent per annum to 6.69 percent per annum, the rate is 10.5 percent per annum after the preferential period.

Many financial experts said that in the context when Covid-19 is still ongoing, savings interest rates are no longer attractive to people, while lending rates have been lowered to boost consumption demand. Over the past time, many investors have made big profits from the stock market, so they have shifted their cash flows to buying real estate.

Controlling real estate credit to avoid speculation

According to the State Bank of Vietnam (SBV), in the past three years, real estate credit has shown signs of decreasing. Particularly, in 2020, under the impact of the Covid-19 pandemic, real estate credit only grew by 11.89%, while it was 26 — 28 percent in 2018 and 2019.

In the first quarter of 2021, the real estate credit growth was three percent, equivalent to the overall credit growth. Compared to the last month of 2020, according to the SBV, the real estate credit growth in this period is higher due to the Covid-19, but compared to the same period of 2018 and 2019, the growth of real estate credit is not higher or even lower than the previous years. For example, in 2019, by the end of March 2021, the credit growth of real estate segment is 5.13%.

“It shows that lending to real estate is being tightly controlled, particularly lending to real estate business of high-end projects. The control of cash flows into real estate segment has been strictly managed by the SBV and frequent warnings have been provided,” said the SBV’s deputy Governor Dao Minh Tu.

According to Nguyen Tuan Anh, director of the Credit Department for Economic Sectors under the SBV, “banks only stimulate lending to people’s consumption needs, and social housing needs. Even in the field of real estate lending, the SBV has a regulation indicator and banks cannot go over the limit. Real estate loans are mainly taken from medium-term funds, while banks’ mobilisation in the medium term is not much”.

Currently, Circular 08/2020 amending Circular 22/2019 regulating safety ratios and limits in the operations of banks and foreign bank branches. Accordingly, the ratio of short-term funds used for medium and long term is 40 percent from January 1st 2020 to the end of September 30th 2021, 37 percent from October 1st 2021 to the end of September 30th 2022, 34 percent from October 1st 2022 to the end of September 30th 2023, and 30 percent from October 1st 2023.

 

Category: Finance, Vietnam

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