Banks will simultaneously lower lending rates after September 1

Accordingly, under current regulations, customers are only allowed to borrow to repay loans at other banks for loans serving production and business, not applicable to loans serving living needs. However, according to Circular 06 amending and supplementing a number of articles of Circular 39/2016, effective from September 1, banks are entitled to consider and decide to lend to customers to repay loans at other banks, not only limited to loans serving production and business but also for loans serving living needs, including loans to buy houses and cars.

Thus, an individual customer who has a loan at bank A, and finds that bank B has a lower interest rate, can propose to this bank to lend capital to pay off the loan early. The customer will enjoy a better interest rate and bank B will also have more borrowers.

This regulation is considered a lifesaver for many people who are facing financial pressure due to loans during the period of high interest rates. There are some cases where home buyers are having to "bend their backs" to pay off debts with interest rates of up to 15%/year when the preferential loan ends.

Banks have lowered lending rates in series since September 1, picture 1 — Customers with high-interest loans are expecting a race to lower interest rates after September 1.

Thus, with Circular 06 taking effect, those who are borrowing at high interest rates are able to mobilize a new loan at many banks with current interest rates fluctuating at 10%/year. Even with some state-owned banks, the mortgage interest rate is quite preferential at around 9%. Not to mention, the new loan also receives a fixed interest rate incentive that can range from 1 to 5 years depending on the bank.

With the interest rate reduction of 4-5%/year, equivalent to a reduction of about 30% of interest. Therefore, the participation of banks in the "race" to reduce interest rates is the expectation of many people who are stuck with high-interest loans.

Commenting on this issue, Dr. Can Van Luc - Chief Economist of BIDV , commented that the nature of this regulation is debt trading, so there may be a shift of customers between joint stock commercial banks and large state-owned banks. In state-owned banks, due to low interest rates, output interest rates are more competitive.

These new regulations of Circular 06 also have a positive impact on the financial market, promoting competition between banks. In order to retain customers, banks themselves must find a way to balance and offer a suitable interest rate. If a credit institution competes well and has favorable credit conditions, it can attract more customers.

However, in addition to expectations of competition through the provisions of Circular 06, many people are also wondering about this debt conversion method. Especially the new loan procedure for mortgage loans, when the mortgage documents are still being held at the original lending bank.

Many banking experts also explain that customers must complete the loan procedures of the new bank, then pay off the loan with the lending bank. However, the borrower must have other assets to mortgage, meaning that there must be at least two assets to be able to do this. In fact, according to current records, commercial banks are still in the process of reviewing and have not yet implemented.

However, in the current context, banks are expressing concerns about old banks and customers deliberately pushing bad debt cases, no longer able to pay to new banks to borrow with higher limits to prolong the debt, which will negatively affect the receiving bank later. Therefore, loan approval may be stricter and more cautious.

In addition, this debt transfer is also related to the credit room issue of each bank. Customers who want to benefit from the policy will have to meet many criteria, and lending banks must also select customers more strictly.

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