Vietnam banks offer low lending rates to boost property market

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Banks in Vietnam are offering low interest loans to customers who want to buy houses in a sluggish property market, but the move has not had a significant impact in boosting consumption.

Phuong Tien Minh, customer development manager of the personal financial services and asset management at HSBC Vietnam, said many banks have been offering incentives for real estate loans, such as low lending interest rates or simpler application procedures.

A representative of the Vietnam International Bank said lending rates have been reduced since July in comparison with early this year mainly because many enterprises have cooperated with lenders to offer consumers preferential treatment and significantly lowered their prices to boost consumption.

The Hanoi-based Bank for Investment and Development of Vietnam (BIDV) said it had prepared VND4 trillion (US$192 million) to lend at 12 percent per year in the first six months of the year.

At the same interest rate, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) had offered VND2 trillion in loans for buying houses.

Orient Commercial Joint Stock Bank (OCB) said it will reduce lending interest rate by three percentage points to 13.5 percent for those who would buy house during the three-month period since late November to late February next year.

According to the State Bank of Vietnam, loans taken to buy houses in the last six months, however, have expanded only one percent from early this year.

The reason for the slow credit, according to an ANZ bank representative, is that customers are waiting for property prices to fall even further, although they have gone down by as much as 30 percent lately.

The domestic property market has declined in the last four years. As of late September, revenues of property enterprises had dropped 20-25 percent while profits declined by 35-40 percent over the same period last year.

As of late August,  the value of unsold houses had reached nearly VND41 trillion ($1.96 billion), head of the Institute of Information and Internet Research told local media.

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