Vietnam bids to help poor with housing
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Vietnam's State Bank has proposed 30-trillion dong (US$1.43 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 bank proposes that state-owned commercial banks set aside at least 3 per cent of 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 15 million dong ($715) sqm; 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 Saigon Giai Phong (Liberated Saigon) the minimum cost of the support package would be 45 trillion dong ($2.14 billion). It was expected to create confidence and stimulate the market.
The interest would equal a house rent or even lower, encouraging more people to buy a house, he said.
But 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 builders and buyers.
The Ministry of Construction had proposed that SBV should lend 35 per cent of 30 trillion dong to enterprises to boost supply and the rest to households to boost demand, but that was thought difficult to manage.
Vietnam 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 rates were trending down. He said the rate should be lower.
