Ministry of Construction proposes new loan package for social housing, capital from government bonds

The interest rate of this credit package will be equal to the lending rate for poor households as prescribed by the Prime Minister in each period (currently 6.6%/year). According to experts, if the current interest rate is applied, the loan package will not be really attractive.

The interest rate of this credit package will be equal to the lending rate for poor households as prescribed by the Prime Minister in each period (currently 6.6%/year). According to experts, if the current interest rate is applied, the loan package will not be really attractive.

According to the Ministry of Construction, to implement the Government 's project to build 1 million social housing units in the 2021-2030 period, a capital source of about VND500,000 billion is needed. Therefore, the Ministry is drafting a resolution on preferential credit capital of VND100,000 billion, equivalent to 20% of the total capital demand, for the Bank for Social Policies to lend to buy, hire-purchase, build, renovate, and repair social housing.

The loan criteria and conditions of the package will be applied according to Decree 100/2024/ND-CP. Accordingly, people will be able to borrow up to 80% of the value of the contract to buy or lease-purchase social housing. In case of new construction or repair of houses, the maximum loan amount is 70% and not exceeding 1 billion VND.

The social housing loan package proposed by the Ministry of Construction will be funded by government bonds. Photo: Trong Tin

The interest rate of the VND100,000 billion credit package will be equal to the lending rate for poor households as prescribed by the Prime Minister in each period (currently 6.6%/year). The maximum loan term is 25 years.

The disbursement period of the preferential credit package of VND100,000 billion will be extended until the credit package is fully disbursed. However, the deadline will not exceed December 31, 2030.

Regarding the implementation roadmap, it is expected that in the period 2025 - 2029, the package will disburse about 16,500 billion VND each year. In 2030 alone, the disbursement amount will increase to 17,500 billion VND.

To implement the preferential credit package of 100,000 billion VND, the Ministry of Construction proposed that the Government assign the Ministry of Finance to review and carefully and specifically evaluate the possibility of issuing government bonds to provide capital for the Social Policy Bank to lend for purchasing, leasing, constructing, renovating and repairing houses.

In another development, the preferential loan package of VND120,000 billion for social housing has not been fully exploited. According to the third quarter report of 2024 of the Ministry of Construction, this credit package has only disbursed VND1,783 billion, accounting for less than 1.5% of the total capital. Of which, about VND1,633 billion has reached 15 projects. The remaining VND150 billion comes from home buyers.

According to Dr. Can Van Luc, Chief Economist of BIDV, the VND120,000 billion credit package uses money from commercial banks. This capital comes from customer deposits, so the preferential interest rate cannot be too high. The attractiveness of this loan package in the eyes of businesses and people has also decreased.

“We need another source of capital that is sustainable and long-term, using the State budget as the main source. That source of capital will be allocated to the Vietnam Bank for Social Policies and the Vietnam Development Bank, instead of commercial banks. When implemented, this will be a big boost for the real estate market,” Mr. Luc affirmed.

From the perspective of Dr. Nguyen Tri Hieu, Director of the Institute for Research and Development of Global Financial and Real Estate Markets, current social housing loan packages have preferential interest rates that are not suitable for workers' incomes.

Based on the current GDP per capita, the average income of people is about 12 million VND/month. Meanwhile, the 120,000 billion VND package has an interest rate of up to 7.5%/year, the loan package of the Social Policy Bank is also at 6.6%/year - equivalent to the current lending interest rate for poor households.

According to Mr. Hieu's calculation, if a home buyer borrows 2 billion VND with an interest rate of over 5%/year, paying gradually over 20 years, the amount to be paid each month, both principal and interest, will be 13 million VND.

“If the interest rate is higher than 5%/year and the loan term is lower than 20 years, it will be very difficult for middle-income families in Vietnam to buy a house, even when applying preferential packages such as VND120,000 billion or VND30,000 billion from the Social Policy Bank,” commented Dr. Nguyen Tri Hieu.

Source: https://baodautu.vn/batdongsan/bo-xay-dung-de-xuat-goi-vay-moi-cho-nha-o-xa-hoi-lay-von-tu-trai-phieu-chinh-phu-d231482.html