Opening up credit flow for social housing loans

Paying attention to solving the housing problem for workers and laborers is one of the major policies of the Party and State to ensure social security and create a foundation for sustainable economic development. Recently, the Prime Minister requested the State Bank of Vietnam (SBV) to study preferential credit policies suitable for social housing, especially preferential credit policies for young people aged 35 and under.

SHB Bank "launched" a home loan package worth 16,000 billion VND, applicable from now until December 31 with interest rates starting from only 3.99%/year. (Photo: HUY TUNG)

Previously, on April 3, 2023, the Prime Minister issued Decision No. 338/QD-TTg approving the Project "Investing in the construction of at least 1 million social housing apartments for low-income earners and industrial park workers in the period 2021-2030". Immediately after the project was issued, the banking industry also immediately deployed a credit package of VND 120,000 billion for social housing loans (later increased to VND 145,000 billion). However, the disbursement speed of the package credit This incentive has been very slow so far, reaching only more than 1% of the total committed capital.

Prioritize capital

In preparation for 2025, at the end of 2024, the State Bank of Vietnam issued Decision No. 2690/QD-NHNN stipulating the interest rates applicable to housing support loans in 2025.

Accordingly, the preferential interest rate is 4.7%/year, applied to outstanding loans under the housing support program. The State Bank also announced a list of 17 commercial banks applying preferential interest rates according to Decision No. 2690, including BIDV, Vietcombank, VietinBank, Agribank, SHB, SeABank, TPBank, Eximbank, PVcomBank, OCB, Nam A Bank, LienVietPostBank, VietBank, NCB, VIB, VPBank, SCB.

On January 3, the State Bank continued to send an official dispatch to 9 commercial banks (Agribank, Vietcombank, VietinBank, BIDV, TPBank, Techcombank, VPBank, MB, HDBank) on the implementation of the Program for lending to social housing, workers' housing, renovation and reconstruction of old apartments according to Resolution No. 33/NQ-CP dated March 11, 2023 of the Government.

Since the Government issued instructions on the implementation of preferential loan packages for social housing, the State Bank and commercial banks have always been ready with all conditions, especially in terms of lending resources. Agribank General Director Pham Toan Vuong said that Agribank has approved 13 social housing projects with a total approved amount of VND3,350 billion and is approaching 5 projects with an expected credit amount of VND2,500 billion.

Not only promoting the VND145,000 billion credit package, commercial banks are also making efforts to implement social housing loan packages according to the policies of the Government and the State Bank. For example, recently, ACB Bank has pioneered in announcing the "First Home" loan package for young people with a loan term of up to 30 years, a fixed interest rate for the first period of up to 5 years with a preferential loan interest rate of only 5.5%/year.

Next, SHB Bank announced the implementation of a home loan package worth 16,000 billion VND, applicable from now until December 31, 2025, with interest rates starting from only 3.99%/year. PVcomBank has also just launched a real estate loan credit package with interest rates starting from 3.99%/year (preferential in the first three months), loan term up to 35 years...

Gradually untie the "knot"

However, although the entire banking sector has made great efforts to push capital into the social housing segment in recent times, the disbursement rate of this credit package is still very limited. According to the Ministry of Construction, to date, only 36/63 provinces and cities have published a list of projects eligible for loans on the electronic information portal.

Of these, only 16 projects have signed credit contracts, with a total capital commitment of VND4,200 billion, the disbursed amount has only reached VND1,727 billion - equivalent to more than 1% of the total committed credit. On the homebuyer side, the review data shows that only about VND150 billion has been disbursed in 12 projects. This number is still very modest compared to the scale of the support package.

Governor of the State Bank of Vietnam Nguyen Thi Hong said that currently, the outstanding real estate credit of the entire system has reached 3.48 million billion VND, accounting for more than 22% of the total outstanding debt of the economy, but many projects are facing difficulties. If this can be resolved, it will help the cash flow return to the bank, and the cash flow will circulate more effectively in credit activities. “For housing credit, the banking industry is very determined to allocate the financial resources of the system, but with limited disbursement results, we also analyze and evaluate that for people with low incomes, not everyone wants to borrow to own a house.

Therefore, the State Bank has also recommended that the Government direct the Ministry of Construction to coordinate with localities to assess the demand for housing ownership, rental or hire-purchase to find appropriate solutions. On the banking side, we will also focus on providing credit to low-income people who want to buy and own housing and meet the bank's loan conditions."

Notably, in order to promote lending for social housing, workers' housing, renovation and reconstruction of old apartments, the State Bank of Vietnam has recently issued a regulation that it will not include this loan amount in the annual credit growth target of commercial banks; at the same time, it requires banks to coordinate with eligible construction projects to promptly disburse when investors have a need for loans, creating favorable conditions for social housing buyers to access loans. Currently, the State Bank of Vietnam is also submitting to the Government a new mechanism and policy with a credit package of 145,000 billion VND... With these moves from the management agency, experts believe that the credit package of 145,000 billion VND for social housing will certainly be strongly promoted in the coming time.

Vice President and General Secretary of the Vietnam Banking Association Nguyen Quoc Hung shared that if there are more preferential loan packages, along with the completion of the legal corridor, it is expected that social housing will develop rapidly. However, because the demand for affordable housing of the people is very large, while the construction of social housing requires mobilizing all resources, not only budget or bank capital, but also other capital sources, Mr. Nguyen Quoc Hung also emphasized the need for more support from mechanisms and policies.

Agribank General Director Pham Toan Vuong proposed that in order for the Project of 1 million social housing apartments to be effectively implemented, localities need to urgently complete the establishment, revision and supplementation of housing development programs and plans; publicize and introduce social housing investment land funds to businesses for research and investment proposals. In addition, it is necessary to balance the local budget to encourage and provide additional incentives to call on economic sectors to participate in investing in social housing development in the locality.

Meanwhile, Chairman of the Board of Directors of Vietcombank Nguyen Thanh Tung proposed that, based on the legal framework that has been significantly improved in 2024, such as the Land Law, Housing Law, and Real Estate Business Law passed by the National Assembly, as well as the planning of 6 socio-economic regions and the majority of provinces that have been approved, the Government and relevant agencies issue specific guidance documents on the implementation of the Law, disseminate training on the implementation of the Law. Thereby, quickly and thoroughly remove legal difficulties and obstacles for real estate projects, free up supply for the market, especially in potential segments, opening up room for new credit growth.

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