Opening door to property credit

The State Bank has loosened the property credit valve and envisaged setting aside VND30 trillion ($1.4 billion) capital packages with proposed at 6 per cent, per year lending rates to fuel demand for social housing.  

Banks, however, reported increasing housing credit in the present context of market hibernation was hard albeit lending requirements have significantly softened.

Eximbank, after four months rolling out a VND5 trillion ($238 million) preferential credit package to boost home purchases, reported modest outcomes, according to a bank source.

“The policy assisting people with social housing purchases will shape more competitive interest rates. However, the State Bank also needs to pull down inflation,” said bank’s general director Truong Van Phuoc, added that further policies should be unveiled to bolster market demands.

Phuoc suggested the State Bank’s low-cost capital infusion to banks through refinancing at low rates to boost social housing purchases should target not only state banks as initially proposed, but also commercial banks.

HDBank deputy director Le Thanh Trung assumed property market difficulties have blocked credit expansion.
“The rebound of property and stock markets will help facilitate the capital flows and the money will end up in banks. Hence, tackling property market hardships will entail opportunities to banks, especially when banks’ bad debts center on property,” said Trung.

According to Nam Long Investment managing director Nguyen Vinh Tran, the property market’s revival depended on demand, interest rates and economic growth.

Of which, the demand for affordable housing segment is always high. The interest rate shall maintain downward momentum this year as it was committed by the government and the corporate community. Meanwhile, economic growth remained a big puzzle, according to Tran.
“Buying houses is by no means simple as long as people still struggle to make a living,” Tran said.

Upon the interest rate factor, a former State Bank executive said the low interest 2-3 per cent per year rate to the property sector in the long term could only be a reality in the context of low inflation which has proven quite a challenging task in current context.