Vietnam banks cut mortgage rates, but buyers not keen

Thanh Nien News

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A view of the Him Lam Riverside apartment project in District 7. Photo by Dinh Son

The first signs of a property market revival have seen banks lower mortgage rates, but they say buyers are not really interested.
Around 10 new housing projects have hit the market in Ho Chi Minh City since early March.
Tan Phuoc apartments in outlying District 12 is being sold at VND24 million (US$1,140) a square meter and sales of the under-construction Hung Ngan Garden apartments in District 12 opened in mid-March at VND10.9 million a square meter.
Doan Chi Thanh, general director of Hoang Anh Saigon Real Estate Company, the developer, said buyers can pay gradually until construction is complete.
Banks are offering mortgages at low interest rates.
Asia Commercial Bank (ACB) has announced a rate of 9.5 percent for the first six months for loans of at least VND300 million for people buying from luxury developer Phu My Hung.
Beyond the preferential terms, the rates will be 3.5 percent on top of the deposit rate.
VietinBank offers loans at 8 percent for the first six months for buying apartments at 17 projects it has tied up with.
BIDV, Vietcombank, VietinBank and state-owned Agribank - Vietnam's largest banks by assets - will join other lenders to extend a combined VND50 trillion ($2.4 billion) to construction and property firms, according to the lead lender, the Vietnam Construction Bank.
The plan is aimed at boosting demand and supply in the construction industry by ensuring credibility of lenders, investors, constructors, and manufacturers.

Tu Tien Phat, retail director at ACB, said banks have to carefully appraise projects before tying up their cooperation with developers.
“The main criteria are that projects have prestigious developers and requisite papers, are not embroiled in disputes,” he was quoted as saying by Tuoi Tre newspaper.
But he said the banks lend mainly for buying individual houses on major streets, which usually requires a mortgage of VND1-2 billion instead of the few hundred millions for apartments.
A Sacombank spokesperson also said lending to buy individual homes has increased faster than for other categories.
Bankers said lending to home buyers has increased by around 5 percentage points since late last year, higher than in previous years but short of expectations given the low rates offered.
The Sacombank spokesperson said the major reason for the cheap loans not having an impact on the market is that many people are waiting for prices to drop further.
Stringent conditions for lending are another reason.
VietinBank, for example, requires buyers to bring in at least a 50 percent margin, or 30 percent if they have other collateral worth 50 percent of the value.
Besides, borrowers will forfeit the low interest rates if they terminate the loan earlier than scheduled.

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