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Low-cost capital still cannot reach to real estate sector
The disbursement rate for real estate projects remains very slow despite the loosened lending conditions. The outstanding loans in the real estate sector have reportedly reached VND 115.5 trillion, amounting to 9.15% of total outstanding loans.
The ceiling lending interest rate has been lowered step by step in accordance with the basic interest rate decrease, now hovering around 12.75% per annum. In fact, the actual lending interest rates are even lower than the ceiling levels, since banks now have capital in excess due to the slow disbursement rate.
Though banks have loosened the conditions for real estate credit, capital still cannot reach to real estate projects, for many reasons.
Bui Tan Tai, Deputy General Director of Asia Commercial Bank (ACB), said that only a half of the VND 2 trillion reserved for real estate credit has been disbursed since September 2008.
Meanwhile, Tai said that the loaning conditions have been loosened, especially in funding the house purchases by installments. The bank commits to give the loans equal to 50-70% of house value for ten years instead of five years as they set in the first two quarters of the year. The lending interest rates prove to be attractive which, according to Tai, are lower than the ceiling level of 12.75% per annum.
Other banks have reported even lower disbursement rates for real estate loaning. The General Director of a joint stock bank said that the bank is now not only funding individuals’ house purchases with installments but also pouring capital in to effective real estate projects. However, he said that real estate developers these days do not really want to borrow money as the real estate market is freezing.
In fact, there are some real estate developers who have the real demand for capital to finish the half-done projects. However, bankers still hesitate to lend to them for fear of the low efficiency of the projects. Banks now have to select good projects, which have been completed the construction and now have good outlets to lend to.
The E-home apartment project by Nam Long Company in District 9, HCM City, for example, has found two banks which have agreed to provide capital to buyers, Viet A Bank and Techcombank.
It seems that real estate developers and banks still cannot find the common voice which has made the capital flow to the real estate sector stop. Meanwhile, individual clients are not interested in purchasing houses at this moment as they still hope the real estate prices will decrease further. Economists also said that the real estate market will not recover until the second half of the next year, especially the segment of houses priced at VND 1 billion and higher.
Lien Viet Bank’s General Director, Nguyen Duc Huong, said that the bank has raised the credit limit to 50-60% of the total values of collateral assets, while it has also lowered the lending interest rates. However, Huong said that it is not easy to push up the disbursement at this moment, as the higher market risks have forced the bank to be more cautious with the loaning.
ABBank has launched the promotion program under which clients can borrow money for ten years with the grace period of three months. The credit limit is 70% of the total capital need, but not higher than 70% of the value of the mortgaged assets.
The Governor of the State Bank of Vietnam, Nguyen Van Giau, told the press at the regular Government’s meeting recently in HCM City that the real estate outstanding loans have reached VND 115.5 trillion so far, or 9.15% of total outstanding loans. As such, the real estate outstanding loans have decreased by VND 8.5 trillion in comparison with the beginning of the year.
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