Domestic banks hit ultra-low levels.

Home loan interest rates continue to fall to their lowest levels.

In early December, several foreign banks simultaneously made significant reductions in mortgage interest rates, while domestic banks remained relatively relaxed. However, very quickly afterward, many domestic banks lowered their interest rates to ultra-low levels.

Currently, the lowest mortgage interest rate in December on the market belongs to Vietnam Prosperity Commercial Bank ( VPBank ). VPBank applies a rate of only 5.9% per year. The maximum loan-to-value ratio at this bank is 75%, and the maximum term is 25 years.

VPBank is able to offer ultra-low interest rates on home loans because the bank is currently applying deposit interest rates below 6% per year. Since the beginning of November 2023, the deposit interest rate at VPBank has been 5.4% per year, applicable to terms of 15 months or more and deposit values exceeding 10 billion VND.

As can be seen, the difference between deposit interest rates and home loan interest rates at VPBank is only 0.5%.

Domestic banks offer extremely low mortgage interest rates (Figure 1). — After foreign banks drastically reduced interest rates on home loans, domestic banks followed suit, lowering interest rates to ultra-low levels. (Illustrative image)

Global Petroleum Bank (GPBank) also offers many incentives for customers buying houses. The lowest rate applied by this bank is only 6.25% per year.

Meanwhile, since the beginning of November, in order to meet the needs of customers borrowing capital for home and car purchases at the end of the year, the Vietnam Investment and Development Bank ( BIDV ) has simultaneously adjusted interest rates downwards for many sectors. The lowest rate for home loans is 7.5% per year for the first 18 or 24 months.

However, this December, BIDV offers the lowest home loan interest rate to customers at 6.5% per year.

Interest rates for home loans at BIDV have dropped significantly as banks in the Big4 group continuously reduce deposit interest rates. Accordingly, the highest rate at BIDV currently is 5.3%/year, applicable to many terms from 12 months or more.

Sacombank (Saigon Thuong Tin Commercial Joint Stock Bank) also applies a home loan interest rate of only 6.5% per year.

Ho Chi Minh City Development Commercial Bank (HDBank) is one of the institutions that has attracted the attention of depositors as it is among the top banks with the highest deposit interest rates.

Accordingly, in the price list effective from December 1st, the highest deposit interest rate at this bank is 8.4% per year, applicable to a 13-month term and a minimum deposit value of 300 billion VND.

However, the interest rate for home loans at HDBank is very low, only 6.8% per year.

Many other domestic banks also have low interest rates for home loans, below 8% per year, such as Saigon Hanoi Commercial Joint Stock Bank - SHB (7.5% per year), Military Commercial Joint Stock Bank - MB (7.5% per year), An Binh Commercial Joint Stock Bank - ABBank (7.6% per year), and Saigon Commercial Joint Stock Bank - SCB (7.9% per year).

With banks lowering interest rates, developers need to reduce property prices.

On the morning of December 7th, Prime Minister Pham Minh Chinh chaired a conference on promoting credit growth.

At the conference, the Prime Minister stated that real estate businesses are complaining about difficulties in accessing capital. However, in recent years, real estate prices have generally increased. If, despite the difficulties, businesses still want to maintain the same selling prices and continue to demand one-sided returns, is this a form of shared responsibility?

At the same time, the Prime Minister also requested that real estate businesses restructure their market segments appropriately and lower product prices. Regarding the banking sector, the Prime Minister stated that policies must be highly flexible; we should not lower lending standards, but flexibility is necessary.

According to the Prime Minister, normal policies are necessary in normal times, while abnormal policies are needed in abnormal times. In difficult times, policies based on the principle of "harmonizing interests and sharing risks" are appropriate, correct, and will promote development.

Responding to the proposal to further reduce interest rates, Governor of the State Bank of Vietnam Nguyen Thi Hong stated that, despite rising global interest rates and many countries raising interest rates to tighten monetary policy, the State Bank of Vietnam boldly adjusted the policy interest rate downward four times in 2023, regulating monetary policy appropriately. Average new loans in the first 10 months of this year have decreased by approximately 3%.

Thus, the new lending interest rates have returned to pre-COVID-19 pandemic levels, a significant effort by the banking sector. The Governor also urged banks to continue reducing costs so they can further lower interest rates.

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