Financial and Banking Expert, Dr. Nguyen Tri Hieu
At the seminar “Realizing the dream of social housing”, Financial and Banking Expert, Dr. Nguyen Tri Hieu shared that according to the decision of the State Bank Governor, the interest rate for social housing loans in 2025 is 4.7% per annum. For example, with a loan of 1 billion VND over 20 years at an interest rate of 4.7%, the borrower would pay approximately 6.4 million VND per month. For an individual with a monthly income of 12-15 million VND, this repayment amounts to about 50% of their income. In other words, for every 100 VND earned, 50 VND goes towards the bank.
Currently, nine banks have committed to providing loan packages for social housing purchases, totaling 145,000 billion VND. However, with a 4.7% interest rate, is this feasible when the average cost of capital is 5-6%, resulting in a loss for the banks? Will banks be willing to sacrifice their profits?
Dr. Nguyen Tri Hieu opined that it is unreasonable to expect banks to make sacrifices. In such a scenario, the government and the State Bank would need to provide refinancing at 2%, allowing for a potential 3% profit margin.
Concrete programs regarding capital are necessary, including the potential issuance of 20-year government bonds with an approximate interest rate of 3% to refinance commercial banks. Even then, lending at a rate of 4.7% would still be challenging.
Additionally, the expert suggested extending the loan period to 30 years to reduce the monthly financial burden on borrowers. The State Bank should also promote credit scoring for individuals, offering lower interest rates to those with higher scores. The 4.7% interest rate would then be adjusted according to one’s credit score, with a certain margin added for those with lower scores.
According to Decree 100/2024/ND-CP, which takes effect from August 1, 2024, and guides the 2023 Housing Law on the development and management of social housing, there are provisions for borrowing capital to purchase social housing from the Social Policy Bank.
Based on Clause 1, Article 48 of Decree 100/2024/ND-CP, the conditions for borrowing preferential capital to purchase or rent-to-own social housing are as follows:
Individuals specified in Clauses 1, 4, 5, 6, 7, and Clause 8, Article 76 of the 2023 Housing Law, who wish to borrow preferential capital to purchase or rent-to-own social housing, must meet the following conditions:
– Have a source of income and the ability to repay the loan as agreed with the Social Policy Bank
– Submit a request for loan capital to purchase or rent-to-own social housing
– Have a contract to purchase or rent-to-own social housing with the investor as prescribed in Decree 100/2024/ND-CP and the law on housing
– Provide security for the loan with the asset formed from the loan capital according to the law. The Social Policy Bank, the investor, and the borrower must clearly define the method of managing and handling the secured asset in a tripartite contract.
According to Clause 3, Article 48 of Decree 100/2024/ND-CP, the loan amount for purchasing social housing at the Social Policy Bank shall not exceed 80% of the value of the contract for purchasing, renting, or renting to own a house.
Interest Rates for Social Housing Loans
Referring to Point a, Clause 3, Article 48 of Decree 100/2024/ND-CP:
– The interest rate for borrowing shall be the same as the interest rate for lending to poor households prescribed by the Prime Minister for each period
– The interest rate for overdue debt shall be 130% of the borrowing interest rate
– The maximum loan amount shall not exceed 80% of the value of the contract for purchasing, renting, or renting to own a house
– If constructing a new house or renovating an existing one, the maximum loan amount shall not exceed 70% of the estimated cost or the capital usage plan (maximum 1 billion VND) and must not exceed 70% of the value of the secured asset
– The maximum loan term shall not exceed 25 years from the date of the first disbursement
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