The Rising Tide of Mortgage Rates: Navigating the Shifting Landscape

As interest rates rise, banks are starting to increase their lending rates for home purchases, with fixed and floating rates on the rise. Techcombank, for instance, has recently increased its floating rate by 0.5% since the beginning of the year, now offering a post-promotional rate of 9.5%/year.

Woori Bank offers a fixed-rate promotion for the first 2-3 years, ranging from 5.9% to 6.1%/year. However, as of July, they’ve increased this rate to 6.4% – 6.8%/year.

According to a survey in August, the average interest rate for home loans is around 5% – 7%/year during the promotional period. Post-promotion, the rates climb to 9.5% – 11%/year.

SSI Securities Corporation’s macroeconomic report indicates that the 12-month interest rate remains lower than in 2021, at 4.5%/year for four state-owned commercial banks, 5%/year for large private banks, and 5.8%/year for the rest.

Regarding lending rates, the promotional rates for home loans have seen a slight increase, from 6% – 7%/year fixed for the first three years to around 7% – 7.5%/year. However, the overall average lending rates haven’t shown significant changes.

According to a survey by Batdongsan.com on the preferred interest rates for home loans, over 50% of respondents considered rates below 8%/year reasonable, while 29% were willing to accept rates between 8% and 10%/year. Only 10% were open to rates between 10% and 13%/year (based on floating rates). Most current borrowers reported an average interest rate of 11.5% – 13%/year.

Mr. Pham Duc Toan, CEO of EZ Real Estate Investment and Development JSC, shared that in the past period, home loan interest rates were quite attractive, with many banks offering fixed rates of 6%/year for the first 2-3 years. Now, with the increase in deposit rates, lending rates for other sectors have also risen. This will impact those taking out home loans, and a rise of over 1% is significant for those borrowing large amounts.

However, according to Mr. Toan, this impact is only short-term, as the real estate market currently has very few products for sale, and transactions are rather sluggish. Most buyers are interested in purchasing homes for their own use, with few speculators.

“In reality, investors have not yet returned to the market because property prices are high, liquidity is slow, and while buying may be easy, selling is difficult. Many investors are still stuck with their inventory and have not re-entered the market. Therefore, if interest rates rise in the future, I believe it will not significantly affect the real estate market,” said Mr. Toan.

CBRE Vietnam, a market research firm, predicts that real estate loan interest rates are likely to face upward pressure as savings rates increase. From now until the end of the year, real estate loan interest rates are expected to trend upward.