Lower lending rates stimulating demand for home loans

According to an industry forecast report released by MBS at the end of June, credit growth had moved closer to the 5-6 per cent target set by the State Bank of Vietnam (SBV), reaching 4.45 per cent.

"Credit slowed in the early months of the year due to the economy struggling with capital absorption capacity, many borrowers not meeting the loan conditions, and a decrease in investment and business-related home purchases. This lead to a decline in credit demand," said Nguyen Thi Hong, Governor of the SBV, at a banking sector conference in June.

However, in the second half of the year, banks are now striving to lower interest rates and boost lending activities with the expectation that home credit will see significant improvement in the third and fourth quarters, achieving the sector's annual target as lending rates remain low.

Nguyen Thanh Hai, regional director of Shinhan Bank Vietnam in Ho Chi Minh City, told VIR, "From a lending rate of 9-10 per cent per year, the current lending rate has dropped to around 5 per cent. This rate is favourable for home loans, providing support during the initial period and ensuring stable long-term financial planning."

Agribank applies an interest rate of 4 per cent per year for loans between 6–12 months. The bank also offers home loans at an interest rate of 6 per cent per year for the first six months and 6.5 per cent per year for the following six months.

Techcombank currently offers a home loan interest rate of just 5 per cent per year during the first three-month preferential period, 6 per cent per year for the first six months, or 6.8 per cent per year for the first twelve months.

VPBank offers loans at an interest rate of 5.9 per cent per year for the first six months. HDBank, MSB, ACB, and OCB apply interest rates ranging from 6.5 to 10.5 per cent per year.

Meanwhile, state-owned commercial banks also compete in home lending with low-interest rates, such as BIDV offering loans at 5 per cent per year, Vietcombank at 6 per cent per year, and VietinBank at 6.4 per cent per year.

Currently, banks are actively stimulating credit demand with preferential credit packages. At BVBank, the lending rate is 5 per cent per year for the first five months from the disbursement date; 5.5 per cent per year for the first six months; 6.5 per cent per year for the first nine months; 7.5 per cent per year for the first twelve months and 8.9 per cent per year for the first 18 months.

Shinhan Bank offers home loans with a fixed interest rate of 5.2 per cent per year for the first year, or 5.5 per cent per year for the first two years, 6 per cent per year for the first three years, and 7.5 per cent per year for the first five years, in which customers are offered home credit at 5.5 per cent per year for the first six months.

Pham Quoc Thanh, CEO, HDBank, said, "Interest rates are no longer a barrier for borrowers; the more critical issue is market demand. HDBank has been gradually reducing lending rates, even for small loans. For the social home sector, HDBank aims to disburse around $208-292 million this year. Therefore, we hope to overcome difficulties in disbursing loans for this segment."

Major commercial banks are readying their resources to lead overall credit growth during the peak season of production, business, investment, and consumption.

The current account savings account (CASA) ratio witnessed a significant decline in the first three months of this year, prompting banks to almost unanimously adopt technology policies and 'zero fee' initiatives to attract new customers.

Credit growth throughout the banking sector in the first quarter remained low at 0.26 per cent, but many banks still reported significant profits.