Lending to start climbing north

A draft circular promoting ownership of affordable housing among low-paid people is being developed by the State Bank (SBV) in cooperation with relevant bodies and state agencies slated for completion in 2013’s first quarter, according to SBV deputy chief Nguyen Dong Tien.

Accordingly, low income earners will become accessible to soft lending with a 6 per cent interest rate per year in 10 years, while loan duration is five year to corporate clients. The SBV will provide low-cost refinancing to banks partaking in the programme.

“Banks will join the programme actively following SBV approval to boost lending. The lending rate 6 per cent per year to prospective home buyers is rational which could bolster demand into low-cow housing segment, in the meantime entail rebound in other relevant sectors,” said VIB acting general director Le Quang Trung.

“Banks hesitate to scale up lending to the property sector amid the market’s high inventories and their bad debt malaise. Hence, property-oriented lending could not warm up without state supportive credit,” Trung said.

BIDV executive unveiled it had set aside a VND30 trillion ($1.4 billion) concessionary credit package for social housing from now until 2015.

In fact, from late 2012 BIDV had proposed the SBV refinance commercial banks at low rates to soften lending rates to social housing to 6 per cent, per year in a bid to fuel demands.

“The bank survey results showed that social housing customers could afford 5-6 per cent, per year interest rate only, so that social housing credit could take off once respective lending rate fell to 6 per cent per year,” said BIDV chairman Tran Bac Ha.

Senior financial expert Nguyen Tri Hieu assumed the SBV should present transparent criteria making all banks accessible to this supportive credit source and should not prioritise only state commercial banks.

A National Financial and Monetary Policy Council member set forth the likelihood the SBV would not limit participation of banks, but state banks would become chief elements.

Accordingly, state commercial banks shall be ought to earmark at least 3 per cent of their chartered capital to lend social housing whereas state supportive credit would be around VND20-40 trillion ($950 million-$1.9 billion) to be disbursed in a few years as said by SBV chief Nguyen Van Binh in early 2013.

Economist Vu Dinh Anh assumed alongside state supportive capital, property firms needed to further slash prices to warm up the social housing market.