Preferential interest rates are not attractive enough, young people still find it difficult to buy a house

According to experts, the current preferential interest rate for young people borrowing to buy houses is not attractive enough because it only lasts for a short period of time.

Short-term incentives, young people are afraid to borrow

After learning about preferential interest rates for young people to borrow to buy a house, Ms. Nguyen Quynh Anh (32 years old, Hanoi ) quickly surveyed banks and found that most of them were lending at an interest rate of 4-6%/year.

But before she could celebrate, Ms. Quynh Anh was worried because this incentive is only applied for a very short period of time, from 3-6 months. Some banks apply a longer incentive period of 1 year but with a higher interest rate, from 7%/year. The fixed interest rate for the first 5 years is nearly 10%. After this period, the interest rate will be floating, based on the deposit interest rate plus an interest rate margin of 3-5%.

“ In general, these packages are not innovative and do not really support borrowers ,” Ms. Quynh Anh commented.

Similarly, Mr. Nguyen Anh Minh (29 years old, from Hung Yen ) also said that the preferential interest rate only applied for a short period of time will still cause borrowers to face financial pressure, in the context that loan interest rates often fluctuate over time.

Many young people think that preferential interest rates for home loans are not attractive because the period of benefit is too short. (Illustration photo: Government Newspaper).

Mr. Minh cited: If a customer borrows 1.5 billion VND for 20 years, the first 5 years enjoy an interest rate of 8.7%/year, the monthly payment fluctuates from 17.5 million VND (first month) to gradually decrease to 14.5 million VND (60th month).

After this fixed rate expires, the floating interest rate may increase to 11%/year or higher, and the debt repayment will jump to more than VND 16 million from the 61st month onwards. This fluctuation can greatly affect the borrower's financial capacity.

" For young couples, the income is usually only about 30 million VND/month, minus living expenses and family expenses, the remaining amount is not worth much. While the principal and interest to be paid each month is from about 15 million VND or more, this is an amount that not every young family can afford. Therefore, many people accept to rent a house, instead of worrying about paying interest to the bank, " said Mr. Minh.

Assessing this interest rate, Dr. Nguyen Tri Hieu - a banking and finance expert, said that if the incentive is only applied for the first few months, it will be very difficult to help young people buy a house, and may even distort their financial calculations.

Moreover, this interest rate is not really attractive. He analyzed that for a person with an income of 100 VND, the safest rate is 50%, which means 50 VND is paid to the bank, and 50% of the income is for living expenses or paying taxes.

" With current interest rates and the income of young people, this rate can often be up to 70 or even 80%. The higher the rate, the less safe it is. Therefore, it is understandable that many young people are afraid to borrow money from banks to buy a house because they have to calculate their ability to repay the debt ," said Mr. Hieu.

According to him, with an interest rate only slightly lower than the commercial interest rate, plus a limited preferential period of 5-10 years, the opportunity to buy a house is still a difficult problem for low-income people, especially young people under 35 years old. He is concerned that without appropriate adjustments, this credit package may follow the "footsteps" of the 120,000 billion VND package that was implemented but disbursed very slowly due to lack of attractiveness.

What to do to clear it?

According to experts, in order for young people to be able to access preferential credit packages to buy houses, banks first need to offer reasonable interest rates.

Mr. Pham Duc Toan, General Director of EZ Property, said that a reasonable interest rate is an average of 5%/year and the loan term is 30 years.

" When buying a house, the borrower only has to pay about 6-8 million VND/month in principal and interest. A couple with an income of about 30 million VND/month, raising two children, and paying over ten million VND in home loan payments each month is difficult to do, " said Mr. Toan.

Sharing the same view, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that there should be a preferential credit mechanism with an interest rate of 6-7% for people aged 18-45 buying a house for the first time in projects in the affordable segment, about 2 billion VND or less.

Dr. Nguyen Tri Hieu also said that it is important to redesign the loan package structure, both in terms of interest rates and loan terms. He suggested that the State Bank should refinance commercial banks at low interest rates, around 3%. Banks can then lend to people at an interest rate of around 5%.

" This level both ensures profit margins for banks and 'reaches' the payment capacity of low-income people ," Mr. Hieu emphasized.

Not only interest rates, loan terms also need to be extended to 20 - 30 years to reduce monthly debt repayment pressure.

Dr. Hieu calculated that with a social apartment worth 1.2 billion VND, people borrow 80% (ie 1 billion VND) within 20 years with an interest rate of 5%/year, then each month they pay about 8 million VND in principal and interest - an acceptable threshold for young families.

In addition to the interest rate package, according to experts, in order for young people to buy a house, another important thing is to balance the supply in the market. Real estate businesses need to focus on the supply structure, developing housing suitable to the needs and financial capacity of the people.

Mr. Le Hoang Chau also emphasized that housing prices and interest rates need to be adjusted synchronously to solve the housing problem. The low-cost housing segment is currently in serious shortage in Ho Chi Minh City and Hanoi, while this is the most suitable choice for young people's ability.

" Encouraging businesses to develop affordable commercial housing projects not only helps to meet the demand for home purchases but also ensures the stability and sustainability of the real estate market ," Mr. Chau emphasized.

Source: https://baolangson.vn/lai-suat-uu-dai-chua-du-hap-dan-nguoi-tre-van-kho-mua-nha-5050981.html