Property credit eases, interest rate soars

New credit to real estate sector has been taken in account in the wake of the central bank’s easing credit to several subjects. Still, lending rates are stubbornly staying around 20%-25%.
Following the central bank’s guidance on loosening credit to four property and consumption segments, a broader range of borrowers could now be financed, said a manager of Bank for Investment and Planning of Vietnam (BIDV). Those of real demand for housing, thus, find bank loans more accessible.

Yet, additional funding only benefits buyers of housing projects funded by BIDV. He revealed a remarkable upsurge in the number of customers requesting for home loan application throughout the branches.

However, the financial expanding programme for borrowers rather than lowering interest rates is allowed citing property loans’ high risk ratio of 2.5%, according to this lender’s notice throughout the network.

Also, the credit growth in real estate sector is currently staying at 7.6% at this bank.”The targeted rate of 16pct has, therefore, enabled our bank to further loaning. What matters is to evaluate the capacity of debt repayment of borrowers in order to circumvent bad debts, according to a source from BIDV.

Deputy general director of another Hanoi-based commercial joint stock bank regarded the central bank’s movement fairly appropriate given the current market condition.

It stands to reason that further funding for the projects so as to be completed by January 1st, 2012 as previously expected could now leave them in a hurry.

Nonetheless, considering those of strong demand for housing, yet without adequate funding, the easing would be a bailout for incomplete projects due to capital shortage.

According to anther general director of HCM City-based lender, this lender ignored almost all new loans in an attempt to lower outstanding loans in non-production sectors as mandated by the Circular 01.

Consequently, the ratio has now accounted for roughly 16pct of the total outstanding loans. “We are considering new credit granting to real estate and consumption sector, yet take loan evaluation seriously so as to hinder bad debts.

Lending rates are still hovering between 20% and 23% p.a”, he said.In the meantime, the current credit relaxation could hardly much facilitate businesses’ and individuals’ borrowing from banks citing the soaring lending rates to non-production sectors of 20%-25% as presently, according to a financial expert.

A normal employee would find it difficult to manage such interest payment, he added. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates