SHB Bank staff advises a young family on credit loans

Thi Bui, a 35-year-old resident of Binh Tan District in Ho Chi Minh City, said that in 2014, her household income was less than VND20 million per month. With this income, she was able to borrow from the VND30,000 billion credit package, established under the Government’s Resolution No. 02/2013 to support production, business, and resolve bad debts. Ms. Bui used this loan to purchase an apartment at the Hung Ngan Garden project in District 12.

Particularly, Ms. Bui was able to secure a loan covering 70 percent of her apartment's value (approximately VND500 million ) from BIDV, with an interest rate of about 5 percent per year for 15 years. “Thanks to this credit package, my husband and I now have a home,” she shared.

Similarly, resident Trung Duc in Ho Chi Minh City’s Go Vap District recalled that in 2014, he borrowed VND700 million (US$27,420) —also 70 percent of the apartment’s value—through the same credit package to purchase a unit in The Dream Home project. His loan carried an interest rate of 6 percent per year.

The cases above are just two among many who benefited from the VND30,000 billion preferential credit package. According to statistics from the Ministry of Construction at the end of 2016, when the package was fully disbursed, approximately 53,000 individuals and households had accessed preferential loans for home purchases and repairs. Meanwhile, businesses received nearly VND5,400 billion in loans, achieving 98.93 percent of the package's expected disbursement. Following this program, several other preferential credit packages for home purchases were introduced.

In early 2023, the Government announced a VND120,000 billion credit program from four state-owned commercial banks including Vietcombank, BIDV, VietinBank, and Agribank - to fund the Project of 1 million social housing apartments in the 2021-2030 period.

The lending interest rate is 1.5 to 2 percentage points lower than the average commercial loan interest rate offered by four state-owned commercial banks during the same period.

The credit package, initially valued at VND145,000 billion, saw participation from five additional private commercial banks. However, by the end of 2024, less than 2 percent of the package had been disbursed. This low disbursement rate is attributed to factors such as high loan interest rates, stringent investor eligibility criteria, and limited borrower access.

Regarding the VND145,000 billion credit package for the 1 million social housing apartment project, Chairman Le Hoang Chau of the Ho Chi Minh City Real Estate Association, stressed that lending interest rates must be significantly reduced and stabilized. He pointed out that the 8.7 percent a year preferential rate for investors, applicable until June 30, 2023, was already quite high compared to standard commercial loan rates.

This is one of the reasons why, by the end of 2024, only VND1,783 billion had been disbursed. Meanwhile, from the banking sector's perspective, General Director Pham Toan Vuong of Agribank stated that the bank has approved 13 social housing projects with a total funding of VND3,350 billion and is in the process of evaluating five more projects, with an expected credit allocation of VND2,500 billion.

To implement the program of developing 1 million social housing units, local authorities must urgently finalize the establishment, amendment, and supplementation of housing development programs and plans. They should also publicize and introduce social housing investment land funds to encourage businesses to research and propose investment opportunities.

Chairman Do Minh Phu of the Board of Directors of TPBank said that with the goal of creating conditions for low-income people to access housing, TPBank has committed to funding VND5,000 billion, of which nearly VND800 billion has been disbursed in the first phase.

Although banks actively participate in social housing development programs, implementation still faces numerous challenges, particularly regarding legal procedures and counterpart funds. Mr. Pham Toan Vuong suggested that the Government introduce stronger support policies, such as streamlining licensing procedures and expanding land availability for social housing. These measures would not only make housing more accessible for people but also drive credit growth in the right direction.

The State Bank of Vietnam (SBV) stated at the recent Government conference that despite allocating financial resources to housing credit, the VND120,000 billion package's disbursement remains low.

The SBV has suggested the Government instruct the Ministry of Construction and local authorities to assess housing needs, including purchase, rental, and leasing options, to develop suitable solutions. The banking sector will prioritize credit for eligible low-income home-buyers.