In an effort to provide social housing (NOXH) and ensure low-income workers have affordable housing, since April 2023, the Government has implemented a credit package of 120,000 billion VND for NOXH loans, workers’ housing, renovation projects, and the construction of old apartment buildings.
After one year of implementation, this credit package has only disbursed 0.5%. This disbursement rate is very low. Many meetings have been held to resolve the issue, and a series of solutions have been proposed, but this credit package has not been utilized.
A social housing project in Thu Duc City, Ho Chi Minh City. Photo: Tan Thanh
On March 12, in Hanoi, the State Bank of Vietnam (SBV) organized a conference to promote the implementation of the 120,000 billion VND credit package. Many opinions have pointed out that the main reason is the high interest rate for loans.
Specifically, the current interest rates applicable in the first half of 2024 are 8% per year for investors (with a loan term of 3 years) and 7.5% for homebuyers (with a loan term of 5 years), and in the following years, the interest rates will float with the market. This factor creates uncertainty for borrowers of NOXH and investors.
Many opinions suggest that if the SBV has lowered deposit interest rates to around 6%, the interest rate for the 120,000 billion VND credit package should also be lowered accordingly. As for the loan term, both homebuyers and NOXH investors face difficulties.
For investors, with the current administrative procedures, it is uncertain whether an NOXH project can be completed within 3 years, so a loan term of only 3 years is too short. For homebuyers, a loan term of 5 years for purchasing NOXH is also problematic, and if the repayment period is extended, the interest will be subject to market rates. So, who dares to borrow?
Meanwhile, the Vietnam Social Policy Bank also has a credit package for low-income individuals to buy houses, with an interest rate of only 4.8% per year (with support from the state budget). Borrowers will certainly choose this package, even though the conditions are more difficult.
All the above-mentioned challenges were once again discussed at a conference on resolving difficulties for this credit package, held on March 16 under the chairmanship of Prime Minister Pham Minh Chinh.
Seeing all the shortcomings of this credit package, the Prime Minister requested the Ministries of Construction, Natural Resources and Environment, and the SBV to focus on developing and issuing decrees and legal documents instructing the implementation of NOXH projects, minimizing administrative procedures to save time, and encouraging social resources.
Another important issue is the need to address related policies. According to the Ministry of Construction, it is expected that in May 2024, guidelines for the laws on Housing, Real Estate Business, Land (amended), and Credit Institutions will be submitted to the government and the National Assembly for early implementation, with an expected effective date of July 1, 2024 instead of January 1, 2025. If successful, a series of housing policies, regulations on homebuying loans from the Vietnam Social Policy Bank will be resolved, increasing the opportunities for low-income citizens to buy houses.
Regarding the interest rate for loans, the Prime Minister requested the SBV to direct commercial banks with state shares to study, develop, and provide credit packages for homebuyers with a term of 10-15 years and lower interest rates by 3%-5% compared to commercial loans. They should also consider reducing the interest rate for the 120,000 billion VND credit package to make it more suitable.
The Prime Minister instructed the relevant ministries and the SBV to report to the Prime Minister to allocate additional state budget funds to implement NOXH loans through the Vietnam Social Policy Bank during the period of 2024 – 2025, according to the laws on housing.
Moreover, the Prime Minister instructed the Ministry of Finance to study the establishment of a NOXH Fund – which is a very important step in building a national housing strategy, ensuring that every citizen has the right to own a house.
