Home buyers still finding it hard to access loans

The State Bank of Vietnam (SBV) has recently excluded some groups from the non-production credit sector such as consumer loans (loans for house repairing and house purchase for living with loan repayment by salaries and wages) and loans for real estate investments (including house construction for low-income earners, workers at industrial zones and projects for completion before January 1, 2012).
However, survey on capital sources for the economy showed the house buyers currently still face hardships in accessing bank loans.

In a talk with press, general director of a HCM City-headquartered unnamed bank said that the central bank’s loosening credit policy for real estate sector is considered a remedy to strengthen the confidence.

With the banks’ actual lending interest rate at 20-24 percent per year, the salaried employees would not dare to borrow to buy house due to too high lending interest rate exceeding their income from wages.

According to this general director, despite the central bank’s approval, in fact, commercial banks are also difficult to lend to sectors under the aforementioned loosening credit because they have to concentrate capital for the economy (export and agriculture), on the other hand they are controlled in terms of credit growth (less than 20 percent in 2011, even at only 15 percent).

In addition, by the time of ending the year, banks often focus capital for business season but not disburse for consumer and real estate investments.

With population pressure while the supply of real estate remains modest, the demand for house purchase is still great. But factually, income of people to buy houses is relatively low compared to the value of real estate.

Therefore, although the central bank has loosened the credit for real estate and excluded some groups from the non-production credit, the market demand power is not high.

For example, from early this year so far, real estate firms have actively supported the interest rate, even spent capital to lower the interest rate for home buyers to stimulate the demand.

Many businesses also had quite attractive support policy in interest rate for home buyers such as committed interest rate of 8 percent per year for the first year, profit commitment of 30 percent and notably some realty firms themselves provided loans for house buyers.

With such positive supporting policies, but not all these programmes attracted customers.

Le Hoang Chau, chair of HCM City Real Estate Association (Horea) said the central bank’s loosening real estate credit policy for house handover projects before January 1, 2012 is too urgent because there is only over one month left to the deadline.

So he proposed, the credit for real estate in the upcoming time should be further loosened and Horea will list segments in real estate sector that need to be excluded from non-production sector to enjoy low interest rate. – Vietbiz24

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market