Lowering lending interest rates, still difficult to stimulate real estate demand

Circular 06/2023/TT-NHNN has opened up the way for investors to use financial “leverage” and borrow capital from other banks to repay debts. However, this move has not been able to help the real estate market change.

Lending rates at low levels

Since September 1, 2023, when Circular 06 takes effect, the leading banks BIDV, Vietcombank, Viettinbank, Techcombank, ACB have started implementing lending policies to repay loans early at other banks for individual customers borrowing capital for production, business and serving living needs.

Home loan interest rates are at 8 - 9%/year but real estate is still facing difficulties.

BIDV Bank applies a preferential loan interest rate from only 6%/year; Vietcombank applies 2 loan interest rate options from 6.9%/year in the first 6 months or 7.5%/year in 12 months, or an interest rate of 8%/year applied in the first 2 years. Techcombank applies this form of loan from 7.3%/year...

According to banks, currently, the group of individual customers who are borrowing to buy houses with interest rates of 10-11% is very large. With the new policy, the opportunity to borrow low interest rates to pay off old loans at other banks will be more open. However, the problem still depends on the source of mortgaged assets. This is a barrier for many people who want to borrow capital.

Ms. Nguyen Thi Chi Chau (Dong Da, Hanoi ) said: “In February 2022, my family borrowed 1.5 billion VND from BIDV bank with a floating interest rate of 11%. Each month, I have to pay the principal and interest of 20 million VND. After Circular 06 took effect, I went to 3 commercial banks to ask for a loan. According to the bank staff's instructions, I still have to have collateral for this new loan. While I do not have collateral. Therefore, I cannot borrow capital with the current low interest rate".

Ms. Nguyen Thanh Tu - BIDV Bank Branch (Nam Trung Yen, Cau Giay) assessed that recently, some customers have received disbursement to repay loans to other banks, but most of them have to meet the criteria of having collateral to mortgage at the new bank. The lending interest rate is lower at 11 - 12%/year for existing loans, but not too low, at 8 - 9%/year.

In the real estate sector, one of the reasons for the sharp decline in real estate transactions in recent times is the rapid increase in home loan interest rates. Currently, home loan interest rates for floating loans range from 11.5 - 14%/year. However, the fact that banks lend to repay bank debts at preferential interest rates like now has partly helped real estate investors who were "burdened with interest" before, find an "escape route" for themselves.

Real housing segment will recover well

Research reports from market research units show that in the first 8 months of this year, while other real estate segments are facing many difficulties, even having to cut losses, segments serving housing needs such as apartments and individual houses are still being traded. These are all housing products serving people with real housing needs or for rent to generate cash flow.

The move to remove the loan capital from the State Bank will create opportunities for real home buyers. Ms. Nguyen Hoai An - Director of Research and Development Consulting Department, CBRE Vietnam said: “Deposit interest rates as well as lending interest rates at banks are being adjusted towards stability again. Interest rates for new home loans have been offered by many banks at only 6 - 8%/year. Along with preferential policies from investors, it has activated the apartment segment to trade again. Investors and those with real housing needs can more easily access bank loans.”

Some experts say that after a period of purification, the current project supply mostly comes from reputable investors, ensuring legality, focusing on real housing needs. This is an important basis for the real estate market to regain confidence and recover.

Recently, many real estate businesses have proactively restructured their products and development strategies to adapt to the new market situation. In particular, investors have proactively reduced product prices by 10-15%. For example, the Binh Minh apartment project (Long Bien) was offered for sale at over 40 million VND/m2, now at 35-37 million VND/m2; the Kim Chung Di Trach land project (Hoai Duc) was priced at 55-60 million VND/m2, a decrease of 5-7 million VND/m2 compared to the previous period...

Mr. Nguyen Anh Que - Vietnam Real Estate Association assessed that currently, the mobilization and lending interest rates have both decreased, investor sentiment is better, the real estate market has begun to have transactions. The credit loan package of 120,000 billion VND is about to be "poured" into the real estate market. The legal corridor for real estate is also moving towards completion to be able to apply in the new year.

For a clearer recovery, the real estate market needs more real housing products. In addition, there is the level of economic recovery, to increase the financial potential of buyers, the return of large investors to the market, the restart of unfinished projects, or the implementation of upcoming policies such as the Land Law, Housing Law, Real Estate Business Law and especially the level of recovery of investor confidence.

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