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Friday, June 14, 2024

VND120 trillion housing package sees progress

The Saigon Times

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HCMC – Banks have started disbursing loans in the VND120 trillion credit support package for social housing projects, said Nguyen Thi Hong, governor of the State Bank of Vietnam (SBV).

At a meeting on July 4 between the central Government and local authorities, Hong said that projects that have obtained construction permits are eligible to borrow from this package. Banks such as BIDV and Agribank have already started utilizing this preferential loan package since the start of the year.

There were 24 eligible social housing projects in the provinces of Bac Giang, Tra Vinh, Tay Ninh, Binh Dinh, Ba Ria-Vung Tau, and Phu Tho, with five of them already granted construction permits.

The VND120 trillion credit package, introduced in early April, aims to encourage investors to develop social housing projects and support workers in purchasing a home. Loans under the package are offered at interest rates that are 1.5-2 percentage points lower than the prevailing market rates for medium and long-term loans.

However, despite the availability of this credit package, the Ministry of Construction reported that no projects qualified for loans in the first half of this year. This was because the localities were still in the process of finalizing and announcing eligible projects. Moreover, most of the projects were still undergoing the necessary investment procedures.

During the conference, the central bank governor said credit to the real estate sector in May grew 14% against early this year.

However, real estate loans for individuals in the first five months dropped by 1.3%, compared to a 15% increase during the same period last year. This suggests that individual real estate investors and homebuyers remain hesitant to invest.

Governor Hong emphasized the need for legal reforms, price reductions and other measures to stimulate consumer demand and investment in the real estate sector.

Interest rates have now returned to pre-Covid-19 levels after continuous efforts to reduce them, making the SBV stand out as one of the few central banks in the world that have lowered key interest rates, she said, adding many other countries have maintained high rates.

Moreover, commercial banks have been directed to review procedures and documentation to facilitate credit access for businesses. Banks have already restructured the repayment terms for 2,800 customers.

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