Over 7 percent of a VND30-trillion (US$1.4 billion) loan package designed to help low-income earners buy homes has been disbursed since it was introduced a year ago, a rate that's been decried as “too slow."
News website Thoi Bao Kinh Te Sai Gon (Saigon Times) quoted a report from the Ministry of Construction as saying that, as of May 31, more than VND2.15 trillion ($101 million) has been disbursed to 5,368 house buyers and 19 housing projects.
Ten buyers and four projects that signed loan contracts are still waiting for funds.
The ministry said the package’s progress improved over the first five months this year, as the total committed loans increased by 225 percent from VND1.76 trillion ($82.45 million) on December 31 last year.
However, insiders say that the progress has only been made on paper.
Nguyen Van Duc, vice chairman of the Ho Chi Minh City Real Estate Association, told the news site that the disbursement of the inked loans has been “too slow" due to “complicated” loan application procedures and a lack of housing that suits government parameters.
Real estate businesses have complained about the problems on numerous occasions this year, but the construction ministry and the State Bank of Vietnam have been “too slow” in making adjustments, he said.
In a phone interview with the news website , Nguyen Hoang Minh, vice chairman of the state bank’s branch in HCMC, also admitted that loan procedures have yet to improve much.
He said he believes that many individuals are waiting for the red tape to be cut before taking out loans.
Meanwhile, in response to Thanh Nien’s questions about slow progress, the Ministry of Construction said certain institutions participating in the loan program remain overly-cautious, as many local banks continue to struggle with bad debts.
Some of these institutions have even implemented extra precautions, which either disqualify most candidates or delay relevant procedures, the ministry said.
Although annual interest rates were reduced from 6 percent to 5 percent in January, the figure remains high given the nature of the program.
Unveiled last June, the loan package was expected to help revive the domestic property market by mainly targeting housing developers, low-income earners, and civil servants.
According to the ministry, Vietnam’s housing inventory has decreased by over 35 percent--more than VND45 trillion ($2.1 billion) in sales--in the first five months compared to the first quarter of last year.
Hanoi saw a reduction of 36 percent; HCMC sold off 45 percent of its housing stock.
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