Mortgage rates could rise from early 2025, but remain at 'record' lows?

(CLO) In the context of increasing mobilization interest rates, combined with higher capital costs, SSI forecasts that average home loan interest rates may increase slightly from the beginning of 2025.

Home interest rates could rise from early 2025

According to SSI Search's report, from November 2024 to present, a number of domestic banks, including Agribank, Techcombank, VIB and MBB, are adjusting their deposit interest rates slightly upward.

Average deposit interest rates have increased from a low of 4.8%/year in the first half of the year to 5.5%/year in the second half of 2024.

SSI explained that one of the reasons for the increase in deposit interest rates is due to higher credit growth than last year, causing a potential cash shortage during the high credit season.

In the context of increasing deposit interest rates, combined with higher capital costs, SSI forecasts that average home loan interest rates may increase slightly from the beginning of 2025. (Photo: TCTC)

Besides, higher rates of return from other investment channels, such as gold and real estate, reduce people's need to deposit money.

Meanwhile, home loan interest rates are also showing an upward trend, ranging from 5.3% - 7.2% per year in 2024. However, SSI believes that home loan interest rates in 2024 are at their lowest level ever, due to fierce competition among domestic banks to attract home buyers and reasonable capital costs.

In the context of increasing deposit interest rates, combined with high capital costs, SSI forecasts that average home loan interest rates may increase slightly from the beginning of 2025.

However, SSI expects stable deposit interest rates and low inflation in 2025 to keep preferential home loan interest rates lower than pre-COVID levels, supporting growth in the real estate market.

“If preferential home loan interest rates increase significantly in 2025, to 9-10% per year, the real estate market may stagnate due to high loan values, putting pressure on home buyers to pay off debt and interest,” SSI forecasts.

Should I borrow money to invest in land at this time?

In the context of low interest rates, some real estate experts still advise investors to be cautious when using financial leverage to invest in the real estate market.

Mr. Nguyen Trung Tuan, a real estate expert, said: The real estate market is showing signs of heating up again, but has not really broken through. Transaction volume is still low, not as expected.

"In the context of weak market liquidity as it is now, the use of financial leverage to invest in real estate needs to be carefully considered. If you borrow too much, investors may suffer a bitter loss," said Mr. Tuan.

Mr. Dinh Minh Tuan, Director of PropertyGuru Vietnam in the Southern region, recommends that borrowing money to invest in real estate at this time should not be a priority because in the next few months to half a year, bank interest rates will increase, leading to an increase in home loan interest rates, especially when interest rates are floating, the financial pressure will be very large.

Expert Nguyen Tri Hieu also pointed out another reason to consider when borrowing money to invest in real estate. That is, real estate prices are currently too high. When housing prices are too high, bank loans will also be high, making the financial burden heavier. Not to mention that when housing prices are high, investors cannot buy, even if accepting a bank loan rate of 70 - 80%, the initial amount of money spent is still very large.

Source: https://www.congluan.vn/lai-suat-mua-nha-co-the-tang-tu-dau-nam-2025-nhung-van-o-muc-thap-ky-luc-post329073.html