Shy... borrowing money to buy a house

Low interest rates but many people still hesitate to decide to "put down money" to buy a house.

According to data from the State Bank of Vietnam (SBV), by the end of September 2024, outstanding home loans increased by only 4.6%, much lower than the total outstanding credit of the economy. This slow growth reflects the fact that the demand for home loans is still not high, even though banks have simultaneously reduced interest rates and introduced preferential policies to attract borrowers.

Many attractive policies

Mr. Le Minh Nghia, a credit officer for individual customers at a large bank in Ho Chi Minh City, said that in recent months, the number of customers borrowing money to buy houses has shown signs of a slight increase. However, according to him, the main reason is that banks are competing fiercely in providing loan packages with soft interest rates and flexible repayment terms, making it easier for borrowers to ensure their ability to pay.

A new apartment project opened for sale in Ho Chi Minh City Photo: TAN THANH

Mr. Nguyen Dinh Thang, head of the personal customer segment of Asia Commercial Joint Stock Bank (ACB), said that although banks have reduced interest rates to boost credit, the demand for home loans is still limited. This is partly due to the fact that real estate prices remain high, while regulations on real estate investment and transactions are undergoing major changes with the promulgation of the 2024 Land Law. Although the demand for home purchases is increasing, home loans have not yet made a strong breakthrough.

Faced with this situation, banks continue to implement attractive policies to attract borrowers. For example, International Bank (VIB) has launched a VND30,000 billion credit package for loans to buy townhouses and apartments with preferential interest rates and flexible solutions for debt repayment.

Ms. Thu Dung - who is preparing to buy a house - said that when she approached VIB to borrow 1 billion VND, the bank staff advised her on interest rates of only 5.9% - 6.9% - 7.9%/year, fixed for 6 - 12 - 18 months. "VIB also waives principal repayment for up to 5 years for loans to buy apartments and waives principal repayment for 4 years for loans to buy townhouses. This will help me reduce the monthly installments in the long run" - Ms. Dung said.

Meanwhile, Mr. Le Viet Thanh (District 12, Ho Chi Minh City) said that in early 2024, he approached Vietnam Export Import Commercial Joint Stock Bank (Eximbank) to borrow money to buy a house. At that time, Eximbank offered an interest rate of 8%/year fixed for the first 12 months, but he did not borrow because he was afraid of unstable employment.

"Up to now, after preparing the financial plan, I contacted Eximbank again and was informed by the bank staff that the loan term is up to 40 years, the principal grace period is 7 years (in the first 7 years, the borrower only pays interest every month, not the principal); the interest rate is 1% lower than at the beginning of 2024" - Mr. Thanh said.

In addition, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is also not out of the competition when offering preferential home loan interest rates from only 5.4%/year, with fixed forms for periods from 6 months to 2 years. However, after the preferential period ends, the interest rate will be calculated based on the 12-month savings interest rate plus a margin of 3.5%.

Still worried about interest rate increase after incentives

Although banks offer quite attractive interest rates in the initial period, many customers are still hesitant when thinking about the possibility of interest rates increasing after the preferential period. Dr. Nguyen Van Thuan, lecturer at the University of Economics and Finance, Ho Chi Minh City, said that it is reasonable for banks to calculate interest rates after the preferential period based on the base interest rate plus a certain margin.

However, customers need to be clearly explained about the mechanism of forming the base interest rate and the factors affecting this interest rate in order to be able to calculate future costs when borrowing capital. "Only then will people be bold enough to access loans, and banks' credit will be improved," said Mr. Thuan.

In fact, in recent years, many old customers have had to pay much higher interest rates than the preferential interest rates for new customers. Some customers said that they still have to pay interest rates of 10%-11%/year for previous loans, while the current preferential interest rate is only 6%-8%/year in the first year. This creates unfairness among customer groups, making old borrowers feel dissatisfied and upset.

However, many people who want to buy a house say that interest rates are not the most important factor, but the liquidity of the real estate market is still poor and sluggish, making them less interested. Even those who previously borrowed to buy townhouses, land or apartments for investment, to rent or wait for the price to increase, are now in no hurry to "put down money" even though the interest rate is very low.

According to Dr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council, outstanding real estate credit as of the end of September 2024 reached VND 3.15 million billion, accounting for nearly 21% of the total outstanding debt of the economy. However, home loans increased by only 4.6%, much lower than real estate business loans, showing that despite low interest rates, the housing market has not had a strong breakthrough.

The main reason why people are not interested in borrowing to buy a house is that real estate prices are still high, beyond the financial capacity of most people. There are almost no affordable housing segments left, especially in Ho Chi Minh City and Hanoi, where 80% of projects opening for sale in 2024 are in the high-end segment. High housing prices have pushed people's living costs up too much, making it difficult to borrow to buy a house.

Demand for loans under 2 billion VND is dominant

According to recent surveys, most homebuyers choose apartments and townhouses priced under VND2 billion. This shows that the demand for affordable home loans, suitable for the income of the majority of people, is still very high. However, the lack of affordable housing projects in big cities like Ho Chi Minh City and Hanoi has made it impossible for those in need of loans to access suitable products.

Source: https://nld.com.vn/rut-re-vay-tien-mua-nha-196241216202148125.htm