Easier mortgage interest rates

Starting from the beginning of the year, banks have been implementing various low-interest credit packages, offering loans to pay off debts from other banks... with the aim of stimulating the demand for home loans.

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Not only offering an initial interest rate of 5% per year for home loans, some banks also fix the interest rate for 2-3 years.

Attracting customers with low interest rates

At the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), starting from the beginning of 2024, individual customers borrowing money to buy houses will enjoy an interest rate of 6.5% per year for the first 6 months or 7% per year for the first 12 months; the minimum loan term is 36 months.

For loans ranging from 60 months and above, customers will enjoy an interest rate of only 7.5% – 8.5% per year. For individual customers who receive salary through BIDV accounts or high-end individual customers, they may receive other benefits such as a 50% reduction in early repayment fees, and a grace period of up to 24 months from the first disbursement date…

Commercial joint stock banks are offering many programs for home loans with longer fixed interest rates. Photo: TẤN THẠNH

Many other major commercial banks are also promoting low-interest home loans. For example, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is implementing a credit package for individual customers to borrow money to buy houses with an interest rate as low as 7% per year for the first 12 months or customers borrowing for buying, renovating houses, and residential land with an interest rate of 7.3% per year for the first 18 months. Meanwhile, the Agriculture and Rural Development Bank of Vietnam (Agribank) applies a fixed interest rate from 7% per year and extends the application period from 12-24 months. At the same time, it reduces the interest rate floor by 0.5 percentage points for medium-long term loans in the real estate business sector.

In particular, Vietcombank allows customers to choose fixed interest rate terms of 2, 3, 5, 7, and 10 years. This is a new development in the home loan market. Previously, commercial banks only offered preferential interest rates for a certain period and then floating rates, with few fixed rates over a long period of 5-10 years. Especially during the period of 2022-2023 when interest rates fluctuated dramatically, almost no bank fixed borrowing rates for more than 3 years.

According to many customers who need to borrow money to buy homes, they are very concerned about the floating interest rates rising sharply according to the market after a short period of enjoying preferential rates. Therefore, banks fixing preferential interest rates for a longer period of time will provide more options for homebuyers.

Homebuyers should still be cautious

According to banks, the demand for home loans at this time has not increased significantly, so it is necessary to offer low-interest credit packages to stimulate demand.

Mr. Trinh Bang Vu, Head of Retail Lending Division of Shinhan Vietnam Bank, said that the demand for loans here to repay loans for buying houses at other banks is quite high. The main reason is that urban real estate prices are still high, even increasing compared to before, while the debt repayment capacity of most borrowers has not improved. For the banks, with long-term loans such as home loans – which can last up to 30 years, the cost of capital is usually higher than in the short term and must take into account market fluctuations and risks from the borrower side. Therefore, after the fixed preferential period, the interest rate will be changed to a realistic pricing structure, taking into account risk provisions and minimum profits.

“The deposit interest rates have been lower than before, so the lending interest rates are also much lower. In 2024, the home loan interest rate will be the most ideal ever, and may even decrease slightly,” said Mr. Trinh Bang Vu.

According to experts, there are many positive factors that will help the real estate market recover faster this year, especially in the housing segment. According to Mr. Hoang Huy, an analyst at Maybank Securities Company, there has been significant improvement in key factors that used to put pressure on the real estate market since 2018, including interest rates, liquidity, and legal framework. “Regulations allowing bond restructuring help reduce liquidity pressure for businesses in the next 2 years. Some new laws passed are also expected to address barriers and create favorable conditions for development projects from the end of 2024 onwards,” commented Mr. Hoang Huy.

Agreeing with the view, analysts from VNDIRECT Securities Company also believe that new laws such as Land Law (amended), Housing Law (amended)… will meet the demand for consistent policies, supporting market sentiment in the coming time, thereby helping the real estate market develop in a transparent, healthy, and sustainable direction.

According to Ms. Trang Le, Senior Director of Research and Consulting at JLL Vietnam, many commercial banks are actively offering real estate loan packages with preferential interest rates, mortgages, and many other support programs. Real estate developers in late 2023 also offered attractive late payment policies. However, homebuyers and investors still need to be cautious and consider various factors. Currently, the supply is limited, and the projects for sale are mainly in the high-end segment, so there is a lack of suitable housing for people’s income and repayment capacity.

“If there is a real demand, homebuyers in the affordable segment can only choose to buy projects in the outskirts of Ho Chi Minh City such as Thủ Đức (formerly District 9), Bình Chánh district, Bình Tân district… or satellite cities around Ho Chi Minh City,” advised Ms. Trang Le.

 

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