Home loan interest rates drop shockingly, some places are only… 0%

Interest rate is only 0%/year

In recent months, many banks have continuously adjusted their home loan interest rates downward. In early December, the market witnessed interest rates being lowered. And since December 20, there have even been banks on the market announcing rates of only… 0%/year.

Specifically, recently, Ho Chi Minh City Development Joint Stock Commercial Bank has just announced a 10,000 billion VND loan program with a preferential interest rate of 0%. However, the preferential interest rate of 0% is applied by HDBank in the first month and attractive interest rates in the following period of the loan.

With a credit package of 5,000 billion VND through the program "New loan, bright life, 0% interest rate", HDBank offers a preferential interest rate of 0% for the first month for new individual customers or existing individual customers who want to borrow more; the remaining months the interest rate is according to HDBank's current regulations.

home loan interest rate shock absorber only 0 image 1 — Home loan interest rates continue to fall. Some banks have shocked the world by offering rates of only… 0% per year. Illustrative photo

For corporate customers, HDBank continues to add a preferential package of VND5,000 billion, with 0% interest rate in the first month for SMEs and for the purpose of paying salaries and bonuses at the end of the year. In the following months, customers will still enjoy preferential interest rates from only 6.7%/year.

The program applies to Home Loan, Business Loan, Car Loan and Consumer Loan packages.

In early December, home loan interest rates at HDBank were also quite low, only 6.8%/year.

Some banks continue to maintain low home loan interest rates, below 8%/year, such as Saigon Hanoi Commercial Joint Stock Bank - SHB (7.5%/year), Military Commercial Joint Stock Bank - MB (7.5%/year), An Binh Commercial Joint Stock Bank - ABBank (7.6%/year), Saigon Commercial Joint Stock Bank - SCB (7.9%/year).

In the Big 4 group (4 state-owned banks including: Joint Stock Commercial Bank for Foreign Trade of Vietnam - Vietcombank, Joint Stock Commercial Bank for Investment and Development of Vietnam - BIDV, Joint Stock Commercial Bank for Industry and Trade of Vietnam - VietinBank and Vietnam Bank for Agriculture and Rural Development - Agribank), BIDV is the unit that has most aggressively adjusted the interest rate for home loans. Currently, this bank applies the lowest figure of only 6.5%/year.

However, this is only the initial incentive. After the incentive period ends, the floating interest rate will fall to around 9.5-13%/year.

Lending rates are expected to continue to fall.

In a newly released strategic report, Vietcombank Securities (VCBS) said that by the end of the third quarter of 2023, the average lending interest rate recorded on the financial statements of listed banks had decreased by about 0.6% compared to the peak in the first quarter of 2023. However, lending interest rates are still about 1.6% higher than the bottom recorded in the fourth quarter of 2021.

Specifically, after the State Bank lowered the operating interest rate four times, the mobilization interest rate has decreased rapidly. The actual lending interest rate has also decreased by about 2 - 2.5 percentage points for newly-arising loans. However, the interest rate applied to existing loans is still at a high level, about 10%/year due to a lag of 3 to 6 months compared to the mobilization interest rate and there is a differentiation in the level of reduction between industries.

VCBS forecasts that lending interest rates may decrease by another 1 - 1.5 percentage points in 2024. In particular, banks will consider lowering interest rates for some groups of businesses with good business prospects to restructure debt and support customers to overcome difficult times.

However, the decline in net interest margin (NIM) and the increase in bad debt are expected to make banks more cautious in lending. Therefore, VCBS believes that there will be a difference in the reduction of lending interest rates.

“The private commercial banking group recorded a stronger decrease in lending interest rates than the state-owned banking group due to the faster increase in overdue loans, as well as these banks themselves reducing interest rates to attract customers,” VCBS commented.

Meanwhile, Mirae Asset Securities Company maintains its expectation of credit growth in 2023 at around 12%. At the same time, Mirae Asset forecasts that lending interest rates may decrease further, based on the further decrease in deposit interest rates.

Source