Is it possible to reach your dream home?!

Currently, in major cities like Hanoi and Ho Chi Minh City, house and land prices are very high.

The most important point when discussing the effectiveness of lowering interest rates is the disparity between housing prices and people's incomes. Currently, in major cities like Hanoi and Ho Chi Minh City, housing prices are very high. At this price level, even if lending interest rates were lowered to 5% per year, many families would still be unable to afford a home loan. Imagine a typical family with an average income of around 25-30 million VND per month, facing a 2 billion VND loan over 20 years. Even with an interest rate of 5% per year, they would still have to pay approximately 13 million VND per month in principal and interest. This figure already accounts for a significant portion of the family's total income, not to mention other living expenses, which discourages many from borrowing to buy a house, even with interest rate subsidies.

A report from VCBS Securities Company also shows that in the first half of 2024, consumer home loan credit increased by only over 1%, while real estate business credit increased by over 10%. This reflects that the demand for housing has not truly recovered, despite interest rate reductions. The main reason remains the excessively high house prices compared to the income of the majority of the population. With the house price-to-income ratio already 4 to 5 times the recommended level, home ownership has become a distant goal, even for those with above-average incomes.

Furthermore, another issue that needs attention is the ability of banks to provide long-term funding. According to Dr. Nguyen Tri Hieu, most commercial banks currently mobilize short-term capital (usually under 12 months), while home loans extend from 10 to 20 years. This mismatch between funding sources and loan terms exposes banks to liquidity risks. Without government support or more flexible financial measures, banks will have to increase deposit interest rates to ensure the maintenance of long-term lending capital. This not only puts pressure on lending interest rates but also reduces the effectiveness of preferential credit packages.

To address this issue, Dr. Nguyen Tri Hieu and many experts have suggested that the government should raise capital from long-term government bonds with maturities of 10 to 30 years. This capital could be allocated to policy or commercial banks to implement home loan programs. This would not only help alleviate liquidity pressure on banks but also ensure the stability of support packages in the long term.

Despite numerous efforts to implement preferential credit packages, disbursement progress remains slow. The 120 trillion VND and 30 trillion VND credit packages, approved by the Government to support people in buying houses, have only disbursed approximately 1,600 billion VND by mid-2024. The main reasons lie in stringent regulations on loan conditions and complex administrative procedures, preventing many developers from accessing loan capital. Many social housing projects, even those already approved, cannot be implemented due to obstacles related to collateral or outstanding credit balances.

Furthermore, the continued rise in housing prices has rendered support packages less effective. According to experts from VPBank Securities, housing prices in major cities like Hanoi and Ho Chi Minh City are currently far beyond the affordability of most people. Overvaluation of real estate not only affects homebuyers but also reduces the liquidity of the real estate market. Instead of borrowing to buy a house, many people have switched to depositing their money in bank savings accounts to enjoy more stable interest rates.

Rising housing prices continue to be one of the biggest barriers for homebuyers, especially those with lower incomes. According to a report from Savills Vietnam, approximately 60% of consumers are currently looking for apartments priced between VND 1.5 and VND 2 billion. However, with current housing prices, even apartments in this affordable segment are becoming increasingly inaccessible, particularly in major cities. This leads to a situation where people cannot afford to buy a home even with reduced mortgage interest rates.

The continuous rise in housing prices has reduced the attractiveness of real estate, not only for homebuyers but also for investors. Small-scale investors, instead of investing in real estate, have chosen other investment channels such as savings accounts to ensure financial security and earn stable interest rates. This significantly impacts the vibrancy of the real estate market and reduces the industry's ability to recover.

Another important issue to consider is the impact of macroeconomic conditions and inflation on interest rate policy. With global inflation trending upwards, banks will be forced to raise deposit interest rates to maintain liquidity. This could lead to a resurgence in lending rates, reducing the effectiveness of support packages. According to Dr. Nguyen Hoang Duong, in the current economic climate, maintaining low interest rates in the long term will be difficult without strict government control.

Maintaining low interest rates not only makes home loans more accessible to the public but also helps stabilize the macroeconomic environment amidst rising inflation. However, if inflation remains uncontrolled, further interest rate reductions will put significant pressure on the banking system and could lead to a financial crisis.

From the above analysis, it can be seen that reducing interest rates on home loans may bring certain benefits in the short term, helping to alleviate the financial burden on people. However, this is not a comprehensive solution to thoroughly address the issue of home ownership in Vietnam. The core of the problem still lies in the excessively high house prices compared to people's incomes, along with the shortage of social housing supply and the fact that support packages have not yet been truly effective.

To truly make housing more accessible to the people, there needs to be synergy between financial measures and housing policies. The government needs to strengthen control over housing prices, develop more social housing supply, and simplify administrative procedures to make preferential credit packages more accessible to the public. Without these comprehensive measures, interest rate reductions can only be a temporary solution, insufficient to create sustainable change in the Vietnamese real estate market.

Source: https://dangcongsan.vn/noi-hay-dung/ha-lai-suat-co-cham-giac-mo-nha-o-680562.html