Vietnam banks get cautious on real estate loans

TN News

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Local banks have tightened real estate lending over fear of repayment risks, slowing credit growth for the property sector.

Pham Trung Cang, a credit official at Asia Commercial Bank, said the real estate market has "hidden risks."

Developers take out loans to build their projects, and then home buyers get mortgage loans secured by the same properties that are developed using bank loans. That is too risky, Cang said.

Dam The Thai, director of the individual customer department at ABBank, said home buyers are always "at a disadvantage" when they make advance payments for properties whose construction has not been finished.

Commercial banks are cautious with home loans in such cases, Thai said.

Real estate lending in Ho Chi Minh City reached VND92.86 trillion (US$4.76 billion) at the end of July, accounting for 15.05 percent of total loans in the city's banking system, according to the central bank. Compared to the end of June, real estate credit growth slowed down in July.

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