Credit for real estate has been cleared.

Lower lending rates to stimulate demand

The credit flow has been "unlocked", bringing a positive signal to the real estate market. At the beginning of last week, the savings interest rate continued to drop to a record low, only 2.2%/year for a term of 1-2 months, 4.8%/year for a term of 12-24 months.

Along with the sharp drop in savings interest rates, a series of banks have lowered home loan interest rates to the lowest level of under 6%/year.
Global Petroleum Bank lends to customers at 6.25%/year. Vietnam Development and Investment Bank offers a loan interest rate of 7.5%/year for the first 18 or 24 months...

In addition, many banks also have low interest rate policies for home loans, below 8%/year, such as Saigon Hanoi Commercial Joint Stock Bank (SHB) with an interest rate of 7.5%/year, Military Commercial Joint Stock Bank (MB) is 7.5%/year, An Binh Commercial Joint Stock Bank (ABBank) is 7.6%/year, Saigon Commercial Joint Stock Bank (SCB) is 7.9%/year.

Cash flow for the real estate market has shown many positive signs but transactions are still not many.

According to experts, interest rates for home loans are at their lowest level in history. The reason why banks can sharply reduce interest rates for home loans is because the mobilization interest rate has also decreased sharply compared to the previous period and banks are also temporarily having a large "surplus" of mobilized capital.

When the bank announced that it would lower interest rates, many investors considered shifting their deposits to buying real estate. However, the number of customers looking to buy is mainly low-value products from 1 to 3 billion VND. Or the group of customers who really want to buy a house to live in.

Ms. Tran Thi Hong Hanh - investor said: "When bank interest rates are very low, if you have idle cash flow, buying real estate is the best option. Currently, in the market, there are many people in the provinces neighboring Hanoi who are looking to buy houses in the inner city districts. This group of customers has very stable financial resources, so when they find a suitable product, they are ready to "put down money" immediately".

In addition, to stimulate real estate demand, project investors also offer many very reasonable financial support options. Popular in the market is the form of 0% interest support with a term of 18 - 24 - 36 months. For customers who do not need to borrow capital, investors discount directly on the selling price from 5 - 10%.

Mr. Vu Cuong Quyet - General Director of Dat Xanh Mien Bac said that in the last month of this year, real estate trading activities have become much more active. Especially, in apartment projects, projects with pink books have been trading very well. The reduction of interest rates by banks has helped people have more opportunities to buy houses. This will promote more stable growth of the real estate market.

Currently, in addition to the credit expansion move from banks, experts say that the market needs to be strengthened with investors' confidence in the transparency of the legality of projects.

Expect stable interest rates

The developments in the real estate market have shown that when interest rates decrease, transactions will increase. Businesses are also in dire need of capital to develop projects and improve supply. With the current deep interest rate reduction, real estate businesses expect interest rates to continue to decrease and remain stable in the long term.

Some businesses that have accessed low-interest loans wish the preferential loan term would be extended. Because real estate loans usually last from 5 to 10 years, but banks only lend at low interest rates for the first year, then float.

"Banks are lending at low rates but for a maximum period of 12 - 18 months. In the following years, floating interest rates will be applied according to the market. Therefore, many businesses are not bold enough to borrow capital because they do not clearly understand how interest rates will develop. Meanwhile, the life cycle of a real estate project usually lasts 5 - 7 years. Banks also cannot calculate how interest rates will fluctuate in the future. Therefore, it is difficult for banks to fix preferential loan rates throughout the entire loan cycle" - Mr. Lam Vinh - Director of An Phat Real Estate Joint Stock Company said.

According to the State Bank of Vietnam’s recently released figures, by the end of the third quarter, credit for the real estate sector by credit institutions reached VND2.74 trillion, up 6.04% compared to the beginning of the year. Of which, credit focused on consumption purposes accounted for 64%, outstanding loans for real estate business activities accounted for 36%.

Thus, credit for real estate business activities increased sharply and reached about VND986,400 billion. This shows that the solutions and efforts of the Government, the banking sector and ministries, sectors and localities in removing difficulties have gradually shown effectiveness.

However, banks currently want to focus on lending to projects encouraged by the Government such as social housing, worker housing or mid-range real estate projects because the ability to collect debts for these real estate products is feasible, meeting the housing needs of the market. Loan packages for businesses are very accessible and have low interest rates.

Deputy Governor of the State Bank Dao Minh Tu affirmed that banks do not tighten real estate and always consider the borrowing needs of real estate enterprises equal to other sectors. Commercial banks still provide credit for real estate with high growth and large outstanding loans last year. For feasible projects and loan plans, banks lend according to regulations. Banks only strictly control credit risks for some high-risk real estate segments, speculative segments leading to bubbles.

Real estate is an industry that contributes 11% of GDP and is closely related to other industries. However, in recent times, this market has encountered many difficulties when credit capital is tightened, supply is in excess of demand and the market lacks transparency... These factors have caused real estate transactions to decrease and many projects to stagnate. The government has introduced many urgent solutions to clear the market. The business community hopes that by 2024, with the support of interest rates, policy issues and legal procedures will be resolved to help the market recover soon.

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