Home loan interest rates are still anchored at a high level, putting financial pressure on existing borrowers, while new borrowers have to “falter”. According to experts, home loan interest rates cannot fall as quickly as expected.
Worried because interest is still anchored high
Demand for housing is still huge. In the context of the current slowing down of the real estate market, this is considered an opportunity for real home buyers to buy at a good price. In the past time, although the loan interest rate has cooled down, but still remains at a high level, many people who intend to borrow money from banks to buy a house have to “falter”, while those who have borrowed to buy a house are still paying towering interest rates. .
Mr. Le Thanh (resident in Ha Dong district, Hanoi) is very worried about his mortgage loan. 2 years ago, he borrowed VND 1.5 billion from a bank to buy an apartment. After enjoying a preferential interest rate of 6%/year, since the beginning of this year, his home loan has been charged a floating interest rate from 10.9%/year, now up to 15.4%/year. Every month, Mr. Thanh has to pay the bank nearly 20 million VND in principal and interest.
What is urgent for Mr. Thanh is that over the past few months, deposit interest rates have dropped sharply, but his loan interest rates have not decreased, even increased. Similarly, Le Hoa (living in Tan Binh district, Ho Chi Minh City) said that she has a loan of 1.8 billion VND at a commercial bank with an interest rate of 13%/year. Hoa is impatient because banks have continuously announced reductions in deposit rates, but her home loan interest rates have not been reduced.
That is the case for existing customers, and new borrowers are also hesitant to borrow money from a bank to buy a house.
Mr. Hoang Nam (Hoang Mai, Hanoi) said that earlier this year, he and his wife planned to buy an apartment to settle down after many years of staying in. But after consulting information about loan interest at some banks, he and his wife found that it was still quite high and exceeded the family’s ability to pay. Home loan interest rates at some banks are still ranging from 13-14%/year, still very high and can fluctuate. Therefore, he and his wife decided to wait a while for the interest rate to decrease further before buying a house.
Many people worry about the application of floating market interest rates by banks.
Lan Anh (Bac Tu Liem, Hanoi) when researching many banks, she learned that the preferential lending rates of banks are currently quite “soft”, only 4.99 – 6%/year. But this preferential interest rate is usually only kept for the first 3 – 6 months, then will float according to the market interest rate.
“The floating interest rate at banks is usually equal to the base interest rate or the 12-month term deposit rate plus 3.5-4%/year, corresponding to the interest rate of 13-15%/year, I’m afraid I can’t afford the current financial conditions,” said Lan Anh.
In fact, the old and new lending interest rates of banks are still quite high.
Home loan interest rates for existing customers at An Binh Commercial Joint Stock Bank (ABBank) are from 14.6 to 15.4%/year; Military Commercial Joint Stock Bank (MB) in the range of 13 – 14%/year; Vietnam Technological and Commercial Joint Stock Bank (Techcombank) from 10 to 12.1%/year; Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) at about 10.7%/year…
For new borrowers, the most preferential lending interest rate is 4.99%/year at Vietnam Maritime Commercial Joint Stock Bank (MSB). But this is a preferential interest rate applied for a short time, then a floating interest rate will be calculated according to the market, estimated at 13.5%/year.
Some other banks still apply preferential interest rates for home loans at over 10%/year. For example, at PVcomBank, the interest rate of 12%/year is only applied for the first 6 months, the following months will be charged at 15.5%/year. Or like at HDBank, the rate of 13.5%/year is only applied for the first year, from the next year, the interest rate will add a margin of 4.5%/year.
With the current high loan interest rate, the story of borrowing to buy a house is really beyond the financial capacity of those with real needs.
Interest rates on home loans are difficult to lower quickly
From mid-March until now, the State Bank (SBV) has reduced the operating interest rate three times. Immediately after this move of the State Bank, the deposit interest rate level of banks has tended to decrease, but the loan interest rate has not changed much.
Currently, many borrowers have not yet received a reduction in interest rates from banks with their old outstanding loans. Many individual customers who borrow to buy cars, houses, etc. still have to bear the common loan interest rate of 12-14%/year.
Banks said that lending interest rates could not be reduced quickly because a large amount of high-priced mobilized capital had not been “digested”. The current amount of loans comes from the period when banks mobilized high interest rates in late 2022 and early quarter I/2023. Banks are still paying high interest on this deposit, so they cannot immediately reduce lending rates.
Leaders of some commercial banks said that they would reduce interest by 0.3-0.5% for existing customers, but only for a certain period of time or with a certain credit package. . The reason comes from the capital cost of banks is still very high.
According to the analysis team of Vietcombank Securities (VCBS), the lending interest rate decreased more slowly than the deposit rate due to policy lag. first.
The chairman of a large real estate group also said: Currently, interest rates for other production and business industries may decrease, but lending rates for real estate are still very high. Even if the bank opens a loan wallet, the business cannot borrow because the project is in legal trouble.
SSI Securities said: “While we see that deposit interest rates have decreased by 250-300 basis points compared to the beginning of the year, the adjustment of home interest rates has not decreased much because home loans are assessed as quite risky in relation to problems in the corporate bond and real estate markets”.
Although liquidity has improved compared to the first months of 2023, according to experts, for real cash flow to return to the real estate market, it still depends largely on the bank’s lending interest rate.
In addition to legal procedures, it is difficult for homebuyers to access loans due to high interest rates. Actual interest rates up to 13 – 14%/year as at present will not be able to promote people’s need to buy houses. Lending interest rates are still anchored at a high level, making homebuyers’ psychology still hesitant, leading to very difficult real estate liquidity even though investors continuously offer support programs such as discounts, price reductions, etc. slow payment but also difficult to sell.
According to the Vietnam Real Estate Brokers Association (VARS), transactions in recent months are still slow, because many people think that borrowing to buy a house at this time is not suitable for family budgets. VARS experts said that only when the average interest rate drops below 10% will the real estate market “react” strongly. An interest rate of 10% is a number that investors can tolerate when borrowing
Economic expert Nguyen Tri Hieu said that home loans are usually long-term loans, so banks will have to consider the risk level of the economy to take into account a deep reduction in interest rates. According to Mr. Hieu, lending interest rates need to be reduced below 10%/year to stimulate demand for real estate, but the problem is that pulling interest rates down to that level at this time is not possible, because world interest rates are in an upward trend, if Vietnam sharply reduces interest rates, it will create instability in exchange rate and foreign exchange.