If the interest rate for buying social housing is "floating", who would dare to borrow?

In many efforts to provide social housing (NOXH) and ensure low-income workers have housing, since April 2023, the Government has deployed a credit package of 120,000 billion VND for loans for NOXH, workers' housing, and projects to renovate and rebuild old apartments.

After one year of implementation, this credit package has only disbursed 0.5%. This disbursement rate is very low. There have been many meetings to resolve the issue, a series of solutions have been proposed but the credit package has not been opened yet.

A social housing project in Thu Duc City, Ho Chi Minh City. Photo: Tan Thanh

On March 12, in Hanoi, the State Bank of Vietnam (SBV) held a conference to promote the implementation of the VND120,000 billion credit package. Many opinions pointed out that the main reason is that lending interest rates are still high.

Specifically, the current interest rate applied in the first half of 2024 is 8%/year for investors (3-year loan term) and 7.5% for home buyers (5-year loan term), the following years are calculated at floating interest rates. This factor makes borrowers buying social housing and investors feel insecure.

Many opinions say that now that the State Bank has regulated deposit interest rates to around 6%, the interest rate of the 120,000 billion VND credit package must also be reduced. Regarding the loan period, both buyers and investors of social housing are also inconveniencing.

For investors, a social housing project with current administrative procedures may not be completed in 3 years, so a loan period of only 3 years is too short. For home buyers, a loan to buy social housing and repay it within 5 years is inappropriate, and if the repayment period is extended, interest must be paid according to the market. So who dares to borrow?

Meanwhile, the Vietnam Bank for Social Policies also has a credit package for low-income people to borrow to buy houses, with an interest rate of only 4.8%/year (with support from the State budget), borrowers will definitely choose this package even though the conditions are more difficult.

All of the above-mentioned shortcomings were once again brought to the table at the conference to remove difficulties for this credit package held on March 16, chaired by Prime Minister Pham Minh Chinh.

Seeing all the shortcomings of this credit package, the Prime Minister requested the Ministry of Construction, the Ministry of Natural Resources and Environment, and the State Bank of Vietnam to focus on developing and soon promulgating decrees and legal documents guiding the implementation of social housing projects, minimizing administrative procedures to save time, and encouraging and mobilizing social resources.

Another important issue is to resolve related policies. According to the Ministry of Construction, it is expected that in May 2024, guiding documents for the Law on Housing, the Law on Real Estate Business, the Law on Land (amended), and the Law on Credit Institutions will be submitted to the Government for consideration and submitted to the National Assembly to allow these laws to take effect early, expected on July 1, 2024 instead of January 1, 2025. If this is done, a series of housing policies and regulations on home loans for citizens from the Social Policy Bank will be resolved, increasing the opportunity for low-income citizens to buy houses.

Regarding lending interest rates, the Prime Minister requested the State Bank to direct state-owned commercial banks to research, develop and provide credit packages for buyers with a term of 10-15 years with interest rates 3%-5% lower than commercial loans; research and consider lowering lending interest rates from the VND120,000 billion credit package accordingly.

The Prime Minister directed relevant ministries and the State Bank to report to the Prime Minister on supplementing the state budget capital to implement social housing loans through the Vietnam Bank for Social Policies for the period 2024 - 2025 in accordance with the provisions of the law on housing.

In particular, the Prime Minister assigned the Ministry of Finance to study the establishment of a Social Housing Fund - this is a very important step in building a national housing strategy, so that every citizen has the right to housing.

These are very drastic measures. If the authorities can resolve them, there will be no shortage of capital for loans to buy houses and social housing.

Source: https://nld.com.vn/toi-len-tieng-lai-suat-mua-nha-o-xa-hoi-ma-tha-noi-thi-ai-dam-vay-196240318140341942.htm