Recently, the Prime Minister requested that the State Bank of Vietnam (SBV) study preferential credit policies suitable for social housing, especially those for young people aged 35 and under.
On April 3, 2023, the Prime Minister issued Decision No. 338/QD-TTg approving the Project "Investing in the construction of at least 1 million social housing apartments for low-income earners and industrial park workers from 2021-2030".
Immediately after the project was issued, the banking sector deployed a credit package of 120,000 billion VND for social housing loans (later increased to 145,000 billion VND). However, the disbursement rate of this preferential credit package has been very slow so far, reaching only more than 1% of the total committed capital.
Prioritising capital sources
In preparation for 2025, at the end of 2024, the State Bank of Vietnam issued Decision No. 2690/QD-NHNN stipulating the interest rates applicable to housing support loans 2025.
Accordingly, the preferential interest rate is 4.7%/year, applied to outstanding loans under the housing support program. The State Bank of Vietnam also announced a list of 17 commercial banks applying preferential interest rates according to Decision No. 2690, including BIDV, Vietcombank, VietinBank, Agribank, SHB, SeABank, TPBank, Eximbank, PVcomBank, OCB, Nam A Bank, LienVietPostBank, VietBank, NCB, VIB, VPBank and SCB.
On January 3, the State Bank continued to send an official dispatch to nine commercial banks (Agribank, Vietcombank, VietinBank, BIDV, TPBank, Techcombank, VPBank, MB and HDBank) on the implementation of the Program for lending to social housing, workers' housing, and renovation and reconstruction of old apartments according to Resolution No. 33/NQ-CP dated March 11, 2023 of the Government.
Immediately after the Government issued instructions on implementing preferential loan packages for social housing, the State Bank as well as commercial banks prepared all conditions, especially in terms of lending resources.
Agribank General Director Pham Toan Vuong said that Agribank has approved 13 social housing projects with a total of 3,350 billion VND and is approaching five projects with an expected credit amount of 2,500 billion VND.
Not only promoting the 145,000 billion VND credit package, commercial banks are also making efforts to implement social housing loan credit packages according to the policies of the Government and the State Bank.
For example, recently, ACB Bank has pioneered in announcing the "First Home" loan package for young people with a loan term of up to 30 years, the first fixed interest rate period is up to 5 years with a preferential loan interest rate from only 5.5% per year.
Next, SHB Bank announced the implementation of a home loan package worth 16,000 billion VND, applicable from now until December 31, 2025, with an interest rate from only 3.99% per year. PVcomBank has also just launched a real estate loan credit package with an interest rate from 3.99% per year (preferential in the first three months), a loan term of up to 35 years.
Gradually removing the “bottleneck”
However, although the entire banking sector has made many efforts to push capital into the social housing segment, in reality, the disbursement rate of this credit package is still limited. According to data from the Ministry of Construction, only 36/63 provinces and cities have announced a list of projects eligible for loans on the electronic information portal.
Of these, only 16 projects have signed credit contracts, with a total capital commitment of VND 4,200 billion, the disbursed amount has only reached VND 1,727 billion - equivalent to more than 1% of the total committed credit amount. On the homebuyer side, the review data shows that only about VND 150 billion has been disbursed in 12 projects. This number is still very modest compared to the scale of the support package.
Governor of the State Bank of Vietnam Nguyen Thi Hong said that the outstanding real estate credit of the entire system has reached 3.48 million billion [MOU1] VND, accounting for more than 22% of the total outstanding debt of the economy, but many projects are facing difficulties.
If this can be resolved, it will help the cash flow return to the bank, and the cash flow will circulate more effectively in credit activities. “For housing credit, the banking sector is very determined to allocate financial resources of the system, but with limited disbursement results, we also analysed and assessed that not everyone with low income wants to borrow to own a house.
Therefore, the State Bank of Vietnam has also recommended that the Government direct the Ministry of Construction to coordinate with localities to assess the need to own a house, rent or hire-purchase to have appropriate solutions. On the banking sector side, we will also focus on providing credit to low-income people who want to buy or own a house and meet the bank's loan conditions”.
Notably, to promote lending for social housing, workers' housing, renovation and reconstruction of old apartments, the State Bank of Vietnam has recently issued a regulation that this loan amount will not be included in the annual credit growth target of commercial banks. At the same time, it requires banks to coordinate with eligible construction projects to promptly disburse when investors require loans, creating favorable conditions for social housing buyers to access loans.
The State Bank of Vietnam is also submitting to the Government a new mechanism and policy with a credit package of 145,000 billion VND. With these moves from the management agency, experts believe that the 145,000 billion VND credit package for social housing will certainly be strongly promoted in the coming time.
Vice Chairman and General Secretary of the Vietnam Banking Association Nguyen Quoc Hung shared that if there are more preferential loan packages, along with the completion of the legal corridor, it is expected that social housing will develop rapidly.
However, because the demand for affordable housing is very high, while the construction of social housing requires mobilising all resources, not only budget or bank capital, but also other sources of capital, Nguyen Quoc Hung emphasised the need for more support from mechanisms and policies.
