Vietnam may reduce lending rates with new housing stimulus package

Thanh Nien News

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Commercial and residential buildings stand illuminated at night in Ho Chi Minh City. Photo credit: Bloomberg Commercial and residential buildings stand illuminated at night in Ho Chi Minh City. Photo credit: Bloomberg

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Vietnam's central bank plans to launch its second housing stimulus package in two years, aiming to reduce borrowing costs for home buyers to boost the sluggish market. 
Under the plan, buyers and developers of commercial housing can take out loans at 7 percent for the first 10 years, compared to the regular 11 percent on the market, local media reported. 
It is estimated that total loans under this package could reach VND50 trillion (US$2.34 billion). 
Further details have not been announced, particularly on how the government will subsidize the low interest rates and which banks will participate. 
Property services firm CBRE said last month that lower lending rates helped the residential market of Ho Chi Minh City recovered last year, but further decreases are needed for the market to be "sustainable and wider."
In June 2013, the central bank unveiled a VND30 trillion ($1.4 billion) loan package designed for housing developers, low-income earners and government employees.
The package cuts interest rates on loans to 6 percent, for 10 years.
A third of the package’s amount has been disbursed so far, according to the construction ministry.
Whether the government's stimulus plans can have a long-term impact on the market will have to be seen.  

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