Vietnam commercial banks cut home loan interest rates

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The number of searches for small apartments with an area of about 45sqm has seen a sharp increase. BAOXAYDUNG.COM.VN/VIET NAM NEWS

Interest rates of home loans at Vietnamese commercial banks have tended to reduce significantly since the second half of last month due to low capital demand from business and production.

The home loan interest rates at State-owned banks, including Vietcombank, BIDV and VietinBank were cut by 0.2 to one percentage points per annum for different terms from the end of last month.

Specifically, the preferential interest rate at BIDV was lowered from eight per cent to 7.8 per cent per annum on 12-month terms, from nine per cent to 8.8 per cent per annum on 24-month terms. By the end of the preferential period, the average lending rate is 10.1 per cent per annum, on a borrowing period of 20 years.

At Vietcombank, home loan interest rates were cut from 8.1 per cent to 7.7 per cent per annum for a preferential term of 12-month. Particularly, Vietcombank provides seven interest rate options so that homebuyers can take the initiative in calculating loan plans.

At foreign-owned banks such as Standard Chartered, UOB, HongleongBank, HSBC and Shinhanbank, the average interest rate of home loan packages is listed at 6.49-8.8 per cent per annum for one- to three-year loans.

In the following years, the additional rate is 1.5-3.9 per cent per annum based on the deposit interest rates for terms from six months to two years, fluctuating from 10 to 10.5 per cent per annum. The borrowing terms are from 20 to 25 years, The Thoi Bao Ngan Hang (The Banking Times) newspaper reported.

For the group of private joint stock banks, Techcombank made the largest interest rate decrease to home loan packages.

Accordingly, the bank stimulates home loans with a long term of 35 years with preferential interest rates of only 8.29 per cent per annum in the first year. After the preferential period, loans of more than five billion dong ($216,000) are offered with an attractive rate of 10.8 per cent per annum.

Other private commercial banks, such as MB, TPBank, VPBank and VIB, also listed 12-month preferential interest rates for home loans at 7.7-10.1 per cent per annum. After the preferential period, the rates will be adjusted to about 11-15 per cent per annum.

According to experts, banks’ interest rate cut for home loans is mainly aimed to boost credit growth targets in the middle of low capital demand for production and business activities due to the impact of the Covid-19 pandemic. The credit growth expanded only 3.45 per cent at the end of last month.

Besides, banks currently also prefer home loans because they are secured and less risky than loans for business purposes. The sharp interest rate decline to the lowest level in the past 10 years is also creating favourable conditions for more people to own home.

However, the current biggest obstacle is that housing prices are still relatively high compared to people’s incomes. Therefore, even when the interest rate level has fallen sharply, it is not enough to encourage people to buy houses.

Thus, if localities, especially big cities like Hanoi and Ho Chi Minh City can boost the supply of small apartments, social housing and commercial housing for low-income people with prices of less than two billion dong per unit, the home loans will grow strongly in the next one or two years as demand for the housing segments has remained high.

Statistics of many real estate exchanges from early in the second quarter until now have pointed out that the number of searches for small apartments with an area of about 45sqm increased strongly by more than 200 per cent compared to the first quarter.