Foreign banks "turn around" from lowest to highest

Home loan interest rates from low to high

Before Covid-19, in the list of banks with the lowest home loan interest rates, foreign banks always accounted for the majority. However, during and after Covid-19, a "changing of stars" situation occurred. Leading the list of units with many incentives for home buyers were domestic banks. Meanwhile, foreign banks were in the Top banks with the highest interest rates.

Specifically, in July 2023, Vietnam Maritime Commercial Joint Stock Bank - MSB is the bank with the lowest home loan interest rate at only 4.99%/year. MSB has implemented this policy for many months.

Behind MSB are Tien Phong Commercial Joint Stock Bank - TPBank (7.8%/year), Vietnam Joint Stock Commercial Bank for Investment and Development - BIDV (7.8%/year), Woori Bank (7.8%/year), Saigon Commercial Joint Stock Bank - SCB (7.9%/year).

Thus, in the Top 5 banks with the lowest home loan interest rates, there is only one foreign name. That is Woori Bank.

Foreign bank home loan interest rate rotates from lowest to highest image 1 — Previously, foreign banks were always on the list of units with the lowest home loan interest rates. But now, the opposite is happening. Illustrative photo

On the other hand, the list of banks with the highest home loan interest rates includes three foreign representatives: HSBC (11.7%/year), Hong Leong Bank (10.7%/year), and Standard Chartered (10%/year).

In which, HSBC has a high position, only behind Vietnam Prosperity Joint Stock Commercial Bank - VPBank (11.8%/year).

Home loan activities at HSBC are introduced: “Simple and quick loan procedures with competitive interest rates; Loans up to 70% of the value of the mortgaged house; Repayment period up to 25 years”.

Before Covid-19, Standard Chartered was often the bank with the lowest home loan interest rate, only about 6.49%/year. Then, MSB appeared and took the "throne" of Standard Chartered.

Currently, there are two foreign banks that are also active in real estate lending. They are Shinhan Bank and UOB. The interest rates for home loans at these two units are 7.99%/year and 9.49%/year.

High but not necessarily "expensive"

Home loan interest rates are quite complicated. Meanwhile, foreign banks have “turned around” from having the lowest interest rates to being among the banks with the highest lending rates. However, high interest rates are not necessarily “expensive” because the interest rate policies at foreign banks are “flatter” than those at domestic banks.

Specifically, MSB is the bank with the lowest home loan interest rate, much lower than other units with a rate of only 4.99%/year. However, this preferential rate only applies in the first 3 months of the loan with a term of over 24 months. From the 4th month onwards, the bank will apply a floating interest rate according to the market interest rate, falling around 13.75%/year.

In addition, there are some other units that also have interest rates below 10%/year. However, like MSB, this preferential rate is only applied for a short period of time, only from 3 months to 6 months. After the preferential period, the interest rate will float, commonly at 12 - 13.5%, even exceeding 14%/year in some places.

For example, Tien Phong Commercial Joint Stock Bank – TPBank is also in the Top banks with the lowest home loan interest rates at only 8%/year. However, customers only enjoy the incentive for the first 6 months. In the next 6 months, the rate of 12%/year will be applied, from the 13th month, the floating interest rate will also be calculated according to the market, falling to about 13.5%/year.

Meanwhile, HSBC has a high "starting point" of 11.5%/year, but this is a fixed rate for the first 5 years.

At Hong Leong Bank, 10.5% per annum is the fixed interest rate applied for the first 3 years. From the 5th year onwards, the floating interest rate is calculated based on the base rate plus 0.49% per annum.

Real estate loan interest rates are high but have also decreased compared to before. According to the latest information announced by the Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong at the National Online Conference of the Government with localities and the regular Government meeting in June 2023 held on July 4, credit for real estate business in the first 5 months of the year increased by 14% but credit for real estate consumption in the first 5 months decreased by 1.32%, while in the same period last year it increased by 15%.

“This shows that up to now, individual real estate investors and home buyers for consumption are not ready to invest, so credit is still low. Therefore, removing legal difficulties and adjusting house and real estate prices are also among the solutions to boost consumer demand and investment in the real estate sector,” said the Governor of the State Bank of Vietnam.

Source