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Banks to lend $1.4b for social housing
The State Bank proposes to provide VND30 trillion (US$1.428 billion) for lending to low-income house renters and buyers, plus investors in social housing projects, at an interest rate of 6 per cent for three years.
The draft proposal announced last week is open for comment. The State Bank of Viet Nam proposes that State-owned commercial banks set aside at least 3 per cent of their total outstanding loans and distribute it to State officials, armed forces, low-income earners and investors in social housing.
Loans would be provided to people renting or buying social houses, and regular houses smaller than 70sq m price below VND15 million ($715) per square metre; and to enterprises on the Ministry of Construction's list of investors in social housing projects.
Loans would be at a preferential interest rate of 6 per cent per year over three years (finishing on April 15, 2016), after which the preferential rate would be set by the SBV. The maximum duration for the loan was 10 years for individuals and five years for enterprises.
Individuals must have a contract with an investor, purchase and live in one house, and have never received preferential rates for buying a house from any bank.
SBV credit department director Nguyen Viet Manh told Sai Gon Giai Phong (Liberated Sai Gon) newspaper the minimum cost of the support package would be VND45 trillion ($2.142 billion). It was expected to create confidence and stimulate the real estate market.
The interest would equal a house rent or even lower, encouraging more people to buy a house, he said.
Still, many experts said many low-income earners did not have enough money for the deposit on a house or an asset to put up as collateral, so only enterprises would benefit.
Housing and Real Estate Department deputy director Nguyen Trong Ninh said both supply and demand must be tackled, which meant the Government should provide support to both developers and buyers.
The Ministry of Construction had proposed that SBV should lend 35 per cent of VND30 trillion to enterprises to boost supply and the rest to households to boost demand, but that was thought to be too difficult to manage.
Viet Nam Federation of Civil Engineering Associations vice president Pham Sy Liem said the interest rate duration was short in comparison with 10 years or even 20 years in other countries. The duration needed to give borrowers confidence in the policy and, he added, the procedures should be simplified to speed up disbursement.
Meanwhile, a real estate company chairman said 6 per cent was reasonable for enterprises but too high for low-income earners, especially when the interest rates were trending down. He said the rate should be lower.
Commercial banks involved would be the Bank for Agriculture and Rural Development, the Bank for Investment and Development of Viet Nam, the Bank for Industry and Trade, the Bank for Foreign Trade and the Mekong Housing Bank.
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