In this context, recently, in the draft Resolution on preferential capital for social housing development, the Ministry of Construction proposed a credit package of 100,000 billion VND for preferential loans, which is expected to create a breakthrough for the social housing segment.
Problems with credit disbursement
In early April 2023, in Decision 338/QD-TTg, the Government approved the implementation of the Project "Investing in the construction of at least 1 million social housing units for low-income earners and industrial park workers in the period 2021 - 2025". With the goal of striving to complete about 1,062,200 apartments in localities by 2030. Of which, 428,000 units will be completed in the period 2021 - 2025; 634,200 units will be completed in the period 2025 - 2030.
To implement the Project, the Government has also approved the proposal of the State Bank (SBV) to allocate VND 120,000 billion at 4 joint-stock commercial banks designated by the State, with a lending interest rate of 8.7%/year for investors and 8.2%/year for buyers and lessees of social housing. From July 1, 2023, every 6 months, the SBV will announce the lending interest rate during the preferential period to participating commercial banks, meaning that the interest rate can be floated according to the market.
With the State Bank stipulating an interest rate only 1.5 - 2% lower per year than the general level for medium and long-term loans, a series of commercial banks (TP Bank, VP Bank, MB Bank, Techcom Bank and HD Bank) have applied to "share the cake" with the registration amount to participate in the program being 5,000 billion VND for each bank, raising the interest rate support capital source to 145,000 billion VND.
Unfortunately, after nearly 20 months of implementation, this credit package has been turned away by people because the regulations set forth by the State Bank are not suitable for their financial capacity. Therefore, after many times of "weighing up and down", in early September 2024, the State Bank decided to lower the interest rate to 7%/year for investors and 6.5%/year for home buyers.
However, according to the assessment, the regulation on such interest rates is still too high for home buyers, so up to now this credit package is still in a sluggish state, this is demonstrated in the detailed report of the Ministry of Construction on the implementation of the preferential credit package of 120,000 billion VND for social housing.
Specifically, by the end of the third quarter of 2024, only 34/63 localities had documents announcing 83 projects eligible for preferential loans on the Electronic Information Portal, with a total disbursed outstanding debt of VND 1,783 billion (of which corporate customers: VND 1,633 billion; homebuyers: VND 150 billion), accounting for about 1.1% of the total registered support capital.
“The implementation of social housing projects is currently facing many difficulties. In the third quarter of 2024 alone, there were 8 projects implemented nationwide, with a scale of 4,960 units; 3 projects approved for investment policy, with a scale of 2,676 units; and only 1 project partially completed, with a scale of 200 units. According to the summary of reports from localities, from 2021 to the end of the third quarter of 2024, the whole country completed 79 social housing projects, with a scale of 42,414 units; 131 projects have started construction, with a scale of 111,687 units” - Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) Hoang Hai informed.
Priority for home buyers
Based on the aggregated data reported by the Ministry of Construction, up to now the whole country has only over 143,000 completed and under-construction social housing apartments, the target of 428,000 apartments in the 2021-2025 period of the Project is almost impossible, because in less than 13 months, only a "miracle" can complete up to 258,000 new apartments. The dream of owning a house soon for low-income people and workers will have to be postponed.
According to Chairman of the Ho Chi Minh City Real Estate Association (HoREA) Le Hoang Chau, social housing is a major policy of the Party and State. This is further demonstrated through the determination to amend and supplement the Housing Law 2023, the Land Law 2024 and a number of guiding decrees under the law with synchronization and consistency in regulations for social housing.
However, the mechanisms for preferential credit sources for social housing development still have many shortcomings, which are worth worrying about, namely the lack of "seed capital" or if there is, the regulations are somewhat strict, so the subjects cannot or have difficulty accessing it.
“Decree 100/2024/ND-CP of the Government stipulates: capital level, preferential interest rate, term and disbursement of loans for social housing projects (7.92%/year for social housing investors for sale, lease-purchase; 6.6% for projects for lease only), has created conditions for investors to access preferential credit sources to implement the project. However, in Official Dispatch 4524/NHCS-TDSV dated August 1, 2024 of the Vietnam Bank for Social Policies, based on Decree 100/2024/ND-CP for home buyers, the loan interest rate of 6.6%/year is high” - Mr. Le Hoang Chau expressed his opinion.
Faced with the above situation, in order to expand preferential capital sources for social housing development, in the draft Resolution on preferential capital sources for social housing development, which is being consulted by the Ministry of Construction with ministries and branches before submitting to the Government for promulgation, it has proposed to implement a preferential package of 100,000 billion VND for loans from bond capital sources, applicable for 5 years. This is the first time the Ministry of Construction has proposed to apply a social housing package by issuing bonds.
Accordingly, the interest rate of this preferential credit package will be equal to the interest rate for poor households as decided by the Prime Minister in each period; the disbursement period will last until the credit package is fully disbursed, but not exceeding December 31, 2030.
Discussing this issue, Vice President of Hanoi Real Estate Club Nguyen The Diep said that the proposal of the Ministry of Construction in the draft Resolution on preferential capital for social housing development is a breakthrough because it expands the development capital and creates opportunities for social housing buyers. However, it is also necessary to clarify the regulations on lending interest rates for this credit package, in which home buyers are the center and should be given priority.
"If the lending interest rate of the VND100,000 billion credit package is equal to the lending interest rate for poor households decided by the Prime Minister in each period, based on Decree 100/2024/ND-CP of 6.6%/year, it will be difficult to encourage people to borrow money to buy social housing at the present time, because the lending interest rate according to the previous Decision 486/2023/QD-TTg was only 4.8%/year" - Mr. Nguyen The Diep said.
Sharing the same view, HoREA Chairman Le Hoang Chau proposed that the Government consider allowing the continued implementation of the regulation on the lending interest rate of 4.8%/year according to Decision 486/2023/QD-TTg of the Prime Minister. Currently, the Vietnam Bank for Social Policies is implementing the Program "loan to support poor households with housing" with an interest rate of 3%/year, so it is best to apply the lending interest rate for buyers and renters of social housing at 3-4.8%/year, to encourage home buyers, stimulate the market, and create motivation for investors to accelerate project implementation.
The Ministry of Construction's proposal of a VND100,000 billion credit package is very appropriate in the context of the current shortage of capital for social housing development, but it is also necessary to learn from the obvious lesson of the VND120,000 billion credit package under Resolution 33/2023/NQ-CP without borrowers, in which it is necessary to carefully study the regulations on conditions, lending interest rates... in accordance with the actual conditions of the people.
Dr. Nguyen Huy Thanh - Financial expert
Source: https://kinhtedothi.vn/tinh-ky-muc-lai-suat-cho-vay.html
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