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Vietcombank recently rolled out a loan package with zero per cent interest rate in the first year to customers at a property project funded by the bank.
About special supportive lending rates currently seen in the market Ho Chi Minh City-based HDBank deputy general director Pham Thien Long assumed banks normally offer lending rates 3-3.5 per cent per year higher than mobilising rates. With a current ceiling raising rate 9 per cent per year, respective lending rates would be 12-13 per cent, per year. As banks seek to boost their lower-than-expected credit growth they may scale down lending rates from three to six months to boost lending, then the rate will be revised to fit market conditions.
Economic experts warned a personal loan contract takes place in at least three to four years, the interest rate will be revised and set based on market rates after certain preferential periods but banks usually do not give any concrete figures. The rate might then be revised to at least 13-15 per cent per year after a short preferential period. That was why property-oriented lending programmes have reported a low capital disbursement though property prices were dropped significantly.
Besides, many property projects with attractive lending rates offered by banks are those with these bank investment or those with high selling prices.
For instance, the price of apartments with Vietcombank’s zero per cent interest rate support in the first year fetch VND40 million ($1,900) per square metre or that at Royal City, Vincom Village and Times City projects with 10 per cent per year lending rate offered by VietinBank charges VND35-45 million ($1,660-$2,140) per square metre.
State Bank former chief Cao Si Kiem said banks pumping capital into illiquid property projects in the hope of scaling down bad debts was unwise since banks might be drowned together with firms.
Senior economist Le Xuan Nghia assumed property price and transactions might resume from late April 2013 and the property market would revive from late 2013 once bad debts find the right response and with a rational policy support.
Nghia argued the property market price fall stemmed mainly from tightening monetary policies. Hence, the possibility for recovery is big if central bank takes acts to loosen realty market credit ‘valve’.
“Policies to fuel demand particularly to medium and low-end housing projects are important such as supporting firms investing in this segment, giving concessionary lending rates to homebuyers and increasing land space to medium and low-end housing projects,” Nghia said.