The State Bank of Vietnam (SBV) has requested credit institutions to continue to reduce lending interest rates for real estate loans and extend the repayment term to support customers affected by the COVID-19 pandemic.
Enterprises propose debt restructuring and interest rate reduction
Many large real estate businesses have proposed to the leadership of banks that credit limits should be expanded and interest rates should be reduced to support businesses in overcoming difficulties. Specifically, Vinhomes Group has proposed that the State Bank of Vietnam (SBV) adjust the borrowing interest rates and maintain the collateral asset ratio as normal loans for projects with full legal status. Banks also need to supplement specific policy mechanisms for large investors and projects with full legal status, gradually reducing interest rates to support financial capacity for buyers and developers.
Agreeing with this view, Ms. Do Thi Phuong Lan, Director in charge of restructuring advice (Novaland Group), said that during the restructuring process and working with international partners, the current major difficulties are system risks and market risks. Stock prices have decreased sharply, and the bond market has experienced large fluctuations in legal regulations, leading to temporary difficulties that seriously undermine the confidence of investors. In this situation, SBV should consider debt restructuring and rescheduling for real estate groups within 2-3 years. In addition, expanding credit limits is necessary for enterprises to have capital for business operations, and also increases investor confidence in corporate bonds.
The article discusses the challenges faced by the real estate market in Vietnam, including legal obstacles and limited access to credit. According to Novaland, one of the solutions to the issue of capital for the real estate market is to remove legal barriers. The company suggests that resolving legal issues will not only increase supply and cool down house prices but also unlock capital for the market. The article highlights the need for a credit mechanism that provides detailed guidance on developing urban infrastructure in remote areas, rather than associating it with individual real estate projects in major cities.
Banks do not tighten credit but still ensure loans for real estate investment.
The article also mentions that the State Bank of Vietnam does not tighten credit for the real estate market and provides equal credit support to this sector as it does to others. However, some segments of the market with high risk, such as speculation and business in large segments, are closely monitored. Regarding the issue of limited access to bank loans for the people, the article explains that due to credit growth being concentrated in the first six months of 2022, many banks used up their allocated quotas, resulting in a shortage of credit in the last months of the year.
The Deputy Governor of the State Bank of Vietnam, Dao Minh Tu, confirms that there is no separate credit quota for the real estate sector. Instead, there are only general credit quotas that are set to control inflation, and there will not be a shortage of credit quotas at the beginning of the year. To address the challenges faced by the real estate market, the State Bank of Vietnam will continue to improve the legal framework for the sector and support the development of urban infrastructure in remote areas.
The State Bank of Vietnam (SBV) has affirmed that it will not tighten credit for real estate and will adjust interest rates while maintaining stable credit room for the real estate market. In addition, the source of capital flowing into real estate in the coming time will focus on feasible loan projects that ensure legal compliance, have the ability to be completed and put into use soon, have good consumption potential, fully and timely repay the loan, and meet the real demand for housing. As for the high-end real estate segment, which is experiencing an oversupply, speculative trading, price manipulation, and market volatility, it will still be tightly controlled to minimize risks.
According to Mr. Nguyen Thanh Tung, CEO of Vietcombank, as of the end of 2022, real estate loans accounted for over 20% of the bank’s outstanding loans, including loans for developing businesses and individuals. In 2022, real estate credit increased by 17%. Therefore, banks have not allowed this field to lack room. He also emphasized that not long ago, major commercial banks had a meeting and agreed to reduce deposit interest rates to lower lending rates in general and real estate lending rates in particular.
Governor of SBV Nguyen Thi Hong stated that she has summarized the suggestions of businesses to promptly resolve difficulties for the market. Regarding the direction of operation in 2023, to implement credit solutions to resolve difficulties and obstacles for real estate businesses and organizations, as well as individuals accessing credit, SBV will continue to use credit room tools and study specific roadmaps to meet credit demand and ensure the safety of the banking system. SBV has also made some specific requests to credit institutions to resolve difficulties for the real estate market. The governor hopes that the conference with the Prime Minister in February will have more specific policies.
– Real Estate