Despite the central bank having extended credit policies for real estate, house buyers are still struggling to access mortgage loans.

Salary earners can’t save VND10 million (USD476) per month to pay interest rates of 20% per annum for accommodation that is currently priced at an average VND1 billion (USD47,607).

High interest rates

HT. Tram, from HCM City’s District 8, intended to take a mortgage to buy a house at VND14 million (USD666.5) per square metre. However, her dream has little chance of coming true as the bank offered her an interest rate of 21% per annum. This would mean her having to pay interest of VND10 million (USD476) per month for a VND1 billion (USD47,607) loan.

According to an anonymous director of a commercial bank in HCM City, the State Bank of Vietnam (SBV)’s new credit policies for real estate are just a way of reassuring people. In fact, banks are applying interest rates ranging from 20%-24% per annum, discouraging salary-earners from taking mortgages.

He explained that commercial banks often prioritise credit for exports and agriculture, rather than for potential home owners and consumption.

Slow market

Due to the rapid population boom, housing demand is on the rise despite modest real estate supply.

Some real estate firms have taken measures to boost demand by subsidising interest rates. Some of them pledged interest rates as low as 8% per annum for the first year to attract clients.

Nguyen Vinh Minh Thanh, General Director of An Cu Lac Nghiep Real Estate Company, said that the real estate market in the near future would continue to experience a lot of risks and challenges. Only looser credit policies for the real estate sector could help the market.