Banks state reasons for difficulty in disbursing loans for real estate

Reflecting on the difficulties in granting credit for real estate, Mr. Nguyen Thanh Tung, General Director of Vietcombank, said that in the process of credit appraisal for real estate units, there is an issue that needs to be changed in legal documents and policies related to the stages, and the reality of projects that have been licensed but still revoked will make it difficult to appraise real estate projects.

“This leads to the bank not only having to appraise the project’s legal documents but also having to review and evaluate legal documents over many years. Legal problems prolong the project implementation time, increase investment costs, and become a barrier to investors’ access to bank loans,” Mr. Tung explained.

In addition, according to Mr. Tung, some legal regulations are still overlapping and cannot be applied in practice. The incomplete legal framework has affected the rights of buyers and caused difficulties for banks when lending and receiving collateral.

Regarding interest rates, although bank interest rates have decreased, housing prices are still high. According to Mr. Tung, this is also a reason hindering the provision of real estate credit.

“Since the beginning of the year, we have reduced the lending interest rate by about 2.5% for both investors and home buyers, but real estate prices have decreased little, not suitable for home buyers. Transactions are mainly for buying and selling, which can cause a bubble and pose risks to real estate credit,” said Mr. Tung.

Credit conference for real estate and social housing development on the morning of November 13.

Mr. Le Ngoc Lam, General Director of BIDV also emphasized: “BIDV has reduced deposit and lending interest rates 10 times, lending interest rates have decreased by more than 20% compared to before. Short-term lending interest rates are only around 6-6.5%, while medium and long-term lending rates are only 8-9%” .

With BIDV, medium and long-term loan projects will be re-evaluated every 3-6 months. With the decrease in deposit interest rates, the lending interest rates will also be adjusted downwards. Therefore, at BIDV, the lending interest rates have decreased in proportion to the deposit interest rates.

However, the difficulties and problems of real estate credit in recent times have mainly been legal issues. “Not only real estate projects but also consumer lending projects are stuck. BIDV statistics show that from last year to now, it has approved about 26,000 billion VND worth of projects, but so far only about 8,000 billion VND has been disbursed. About 18,000 billion VND is still waiting to resolve legal problems such as construction permits, site clearance, conversion of land use rights value…” .

Representative of MBBank, General Director Pham Nhu Anh informed: “The lending interest rates at banks at the present time are the lowest ever, even compared to the COVID-19 period. The current medium and long-term lending interest rates for real estate are around 9-10%, which is very low compared to the world market. Basically, the loans are banks breaking even, to reduce it will take time, when the bank reduces the cost of capital” .

According to Mr. Pham Nhu Anh, most banks have a cycle of adjusting interest rates every 3 months. Therefore, lending interest rates will quickly decrease according to deposit interest rates.

MBBank leaders also confirmed that they do not have any policies to tighten real estate lending, and even expand the scope of real estate lending.

The biggest problem with real estate credit today is legal procedures. “ Banks are risky businesses, so if the risk is high, banks must evaluate more closely. Businesses must also provide accurate and transparent financial information. Sometimes, businesses provide the best numbers to banks, which also causes difficulties for banks, ” said Mr. Anh.

Cong Hieu

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