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Sunday, February 25, 2024

HoREA proposes VND110-trillion credit package for social housing

The Saigon Times

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HCMC – The HCMC Real Estate Association (HoREA) has proposed a VND110-trillion credit package aimed at facilitating the construction of affordable housing units for workers.

The purpose of this credit package, according to the association, is to address the pressing demand for affordable housing by offering loans at interest rates of 4.8% to 5% per year.

There exists a VND120 trillion credit package sourced primarily from commercial banks. This initiative targets both developers and individuals involved in social housing projects, providing an interest rate of 7.7% per year for homebuyers and renters, with a slightly higher rate of 8.2% for social housing project developers.

These rates may appear to be advantageous as they remain 1.5% to 2% percentage points lower than prevailing interest rates at banks. However, concerns have been raised regarding the short-term benefits, with interest subsidy limited to a five-year term and the semiannual interest rate adjustments, which have created uncertainty among borrowers.

In response to these challenges, HoREA underscores the importance of ongoing collaboration among key stakeholders, including the Ministry of Construction, the State Bank of Vietnam, the Ministry of Planning and Investment, and the Ministry of Finance.

The proposed VND110-trillion credit package, initially suggested by the Ministry of Construction in February, mirrors the successful VND30-trillion credit program implemented between 2013 and 2016.

Featuring an attractive interest rate of 4.8% to 5% per year and a maximum loan term of 25 years, this proposed credit initiative allocates about 50% of the funds to social housing project developers, with the remainder dedicated to homebuyers and house tenants.

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