Foreign banks saw sharp declines, while domestic banks remained unperturbed.

Công Luận•05/12/2023

In November, the wave of deposit interest rate reductions entered a new cycle. Interest rates were lowered to new, very low levels by the Big 4 banks (including the four state-owned banks: Vietnam Foreign Trade Commercial Bank – Vietcombank, Vietnam Investment and Development Bank – BIDV, Vietnam Industrial and Commercial Bank – VietinBank, and Vietnam Agricultural and Rural Development Bank – Agribank ).

Therefore, mortgage interest rates are expected to fall rapidly in December. However, currently, foreign banks are more proactive in reducing mortgage interest rates, while domestic banks are taking a more leisurely approach.

Foreign banks' home loan interest rates have decreased significantly, while remaining consistent with Figure 1. — While some foreign banks have drastically reduced interest rates on home loans, many domestic banks remain unhurried. (Illustrative image)

Foreign banks saw sharp declines, while domestic banks remained relatively stable.

Shinhan Bank, a South Korean bank, has aggressively adjusted its mortgage interest rates. After applying a reduction of up to 1%, the interest rate at Shinhan Bank has dropped to just 6.6% per year, the lowest in this lending segment. However, the promotional period is quite short, only the first 6 months. Shinhan Bank's maximum loan-to-value ratio is among the lowest in the market at 70%.

Thus, after exactly one year, interest rates for home loans at Shinhan Bank have dropped significantly, by 4.3% compared to 10.9% in December 2022.

The rate of interest rate reduction at Hong Leong Bank is considerably slower than at Shinhan Bank. Currently, the prevailing interest rate at the Malaysia-based bank is 7.3% per annum, down from 7.5% in November 2023. In December 2022, interest rates at Hong Leong Bank reached 13%.

Meanwhile, Woori Bank and HSBC maintained their home loan interest rates at 7.2% and 9.75%, respectively.

Meanwhile, domestic banks remain relatively unhurried, not yet adjusting their listed interest rates. A few institutions still offer rates above 10% per year. These include Maritime Bank (MSB) at 10.99% per year; Tien Phong Bank (TPBank) at 10.7% per year; and Techcombank at 10.5% per year, unchanged from the previous month.

Previously, MSB was consistently ranked among the banks with the lowest home loan interest rates, at just 4.99% per year. However, this preferential rate was only applicable for a short period.

Some banks offering home loan interest rates lower than 10% include Vietnam Public Commercial Bank - PVcomBank (9%/year); Orient Commercial Bank -OCB (8.49%/year); and Saigon Commercial Bank - SCB (7.9%/year). Among them, SCB stands out with its maximum loan-to-value ratio of up to 100%.

Prioritize the first house.

At the Real Estate Credit and Social Housing Development Conference held in mid-November this year, a representative from Vietnam Prosperity Commercial Bank (VPBank) assessed that, from the perspective of individual customers buying homes for personal use, high interest rates on home loans are affecting the demand for loans from homebuyers.

Nevertheless, VPBank balances and identifies lending in the real estate sector as one of its key areas. In particular, it focuses on consumer real estate, specifically loans for individuals purchasing homes for personal use or consumption. Priority is given to social housing for low-income individuals, and lending to industrial parks and export processing zones in accordance with the Government and State Bank's guidelines. However, it exercises caution and tightens lending to tourism and resort real estate, including condotels.

Meanwhile, a representative from Vietnam Joint Stock Commercial Bank for Industry and Trade - VietinBank stated that the bank has always been a pioneer in implementing the policies and directions of the Government and the State Bank of Vietnam, and has coordinated with local authorities in supporting businesses. It is one of the leading credit institutions in providing preferential interest rate support to customers according to Decree 31.

VietinBank has a policy of partially subsidizing interest rates for people buying their first home for residential purposes (the subsidy level may be 2%, equivalent to the support for production and business activities under Decree 31) and/or has a specific interest rate subsidy mechanism for customers buying real estate to stabilize the market and support credit institutions in financing customers.

VietinBank continues to facilitate access to real estate credit for both corporate and individual customers to serve genuine and legitimate credit needs, feasible projects/loan schemes, projects with legal compliance, and projects that are likely to be completed and put into use soon; especially for real estate segments with potential/prospects for development, in line with the direction of the Government and the State Bank of Vietnam, such as industrial park real estate, urban residential real estate, housing for workers, and social housing.

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