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The Youth Advantage: How Businesses Can Lower Interest Rates and House Prices for Buyers Under 35.

18 February, 2025

## **People Hopeful, Businesses Cheer**

At a conference with commercial banks on February 11th, Prime Minister Pham Minh Chinh requested that the State Bank and commercial banks research and develop preferential credit packages for both supply and demand to promote social housing, housing for young people up to 35 years old, and housing for disadvantaged groups.

This information immediately sparked hope for Ms. Minh Thu (30 years old), who now envisions a chance to buy a home in Hanoi after almost a decade of living and working in the capital.

According to Ms. Thu, skyrocketing housing prices have made homeownership incredibly challenging for her and her husband, with a combined monthly income of just over 30 million VND. Preferential credit packages with low-interest rates for young people like them would be a significant opportunity for many couples like themselves to achieve their dream of owning a home.

Preferential credit packages for housing aimed at young people up to 35 years old, if implemented, would create significant welfare opportunities. Photo: Hoang Ha

From a business perspective, Mr. Vu Kim Giang, Chairman of the Board of Directors of SGO Group, shared that preferential credit packages for both supply and demand in developing housing for young people up to 35 years old would positively impact the real estate market. A diverse range of options for buyers would foster a sustainable market.

Mr. Giang referenced a previous preferential credit package of 30,000 billion VND, which was not only for social housing but also for affordable commercial housing. This helped many individuals secure loans and purchase homes. He suggested that a new package with reasonable interest rates and longer repayment terms of at least ten years would greatly benefit buyers.

“For businesses developing commercial housing projects, stable interest rates of 8% per year for 5-10 years would reduce production costs and lead to more suitable housing prices,” said Mr. Giang. “For young people up to 35 years old taking out loans to purchase homes, maximum preferential rates equivalent to social housing loan rates of around 5-6% would be ideal.”

**Should there be a separate fund or should it be integrated into existing preferential credit packages?**

Mr. Pham Duc Toan, General Director of EZ Property, emphasized the potential impact of preferential credit packages for young people up to 35 years old, stating that it would create significant welfare opportunities for today’s young workforce. He believes that a separate fund should be established for these loans rather than relying on commercial bank packages.

Mr. Toan drew a comparison to the previous 30,000 billion VND package, which was genuinely preferential and accessible to many. He suggested that a dedicated fund would make it easier for both businesses and homebuyers to obtain loans. For companies developing social housing, loan approvals should be based on investment efficiency rather than stringent requirements that create obstacles.

Similarly, Mr. Toan proposed streamlining loan procedures for homebuyers and extending repayment periods to up to 30 years to reduce monthly payments. An average interest rate of 5% per year would be reasonable. Ideally, young homebuyers would pay around 6-8 million VND per month, including principal and interest. He explained that for a couple earning 30 million VND per month with two children, it would be challenging to afford loan payments of over ten million VND each month.

Additionally, Mr. Toan, the EZ Property General Director, recommended addressing legal and institutional bottlenecks to motivate local governments to develop social housing and housing for young people, thereby diversifying supply.

PGS.TS Dinh Trong Thinh, an economic expert, suggested that these low-interest loans for young people and disadvantaged groups could be integrated into existing home loan packages, such as the 145,000 billion VND package offered by commercial banks for social housing or the package provided by the Social Policy Bank for disadvantaged families.

Mr. Thinh proposed, “Instead of establishing a separate fund for young people under 35, it would be more feasible to consider integrating them into existing packages. This would prevent the dispersion of preferential capital. Young people up to 35 years old could be included as a priority group eligible for social housing.”

Nguyen Le

– 05:35 13/02/2025