The demand for houses of people, especially young families, has increased sharply in recent years, in which bank loans to buy houses have also become more and more popular. Banks therefore race to launch lending products with many incentives to compete with each other.
Currently, borrowers can mortgage with assets formed in the future, use the house that is intended to buy or other real estate assets to mortgage. Customers can also access the maximum loan amount of 70 percent to 100 percent of the value of collateral. Interest is the primary concern of homebuyers to be able to calculate appropriate interest payment plans, avoiding falling into debt.
Banks do not have a fixed interest rate for a home loan but depend on each period, sales policy at each project. Survey on the market today, interest rates for buying houses for commercial banks are popular from seven percent to nine percent per year for six-month preferential period and eight percent to 12 percent per year for one-year preferential period or more. After a fixed time, the applicable interest rate is usually the base rate plus three percent to four percent per year depending on the policy of each bank. Usually, the base rate is the highest mobilising interest rate that banks are applying, popularly for 12 month to13 month terms.
State-owned commercial banks often have lower preferential interest rate than private banks. For example, with Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) branches, fixed interest rate for buying a mortgage for the first 12 months was 7.7 percent to 8.1 percent per year, for the first 24 months was 8, 7 percent to 8.9 percent per year, 0.2 percent to 0.5 percent lower than private banks.
In large private banks, the initial preferential interest rates ranged from eight percent to 11 percent per year with the first 12-month incentive option. As in Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), bank offered loan at an interest rate of 7.49 percent per year; after 12 months, the interest rate was equal to the saving interest rate plus 4.49 percent per year; loan term was up to 25 years; early repayment fee was about two percent in the first four years.
At Vietnam International Commercial Joint Stock Bank (VIB), the bank lent up to 80 percent of the capital demand. Loan period was up to 30 years. Interest rate started at 7.9 percent per year for six-month preferential period, from the seventh month onwards interest rate was equal to the base rate plus 3.7 percent. Meanwhile, at Sai Gon Joint Stock Commercial Bank (SCB),for six-month preferential term, home loan interest rate was 9.9 percent per year.
Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) had a lower preferential interest rate, fixed in the first 12 months of 7.9 percent per year. After 12 months, the interest rate would be equal to the 24-month deposit interest rate plus three percent per year. However, the early repayment fee in this bank was quite high, the first year was four percent, the second year was 3.5 percent, etc.
Many other banks offered loans at an interest rate of 11 percent to 12 percent per year for 12-month preferential period. Vietnam Export Import Commercial Joint Stock Bank (Eximbank) had a loan package with an initial interest rate of 11 percent per year fixed for 12 months. Interest rate after a fixed period equal to 24-month deposit interest rate plus three percent; early repayment fee is one percent to two percent in the first three years. Kien Long Commercial JointStock Bank (Kienlongbank) lent at an interest rate of 11.7 percent during the preferential period, free of charge for early repayment.
It can be seen that in the context of fierce competition in the home loan segment, interest rate at banks are not too different. The difference may be offset by other factors such as loan rate, early repayment fee, maximum lending time and accompanying support services, etc.
Many borrowers are too attracted by preferential interest rates in the beginning but forget that preferential interest rates are only applied for a short time. After that period, banks will charge interest based on the base rate and add three percent to four percent per year. Currently, capital mobilisation pressure is pushing deposit interest rate to a high level, and may even increase. The pressure of paying debts in the future of customers will be increasingly heavy.
In fact, home loan interest rates have also increased slightly since the beginning of 2019 due to the pressure of medium and long-term capital mobilisation of banks as well as the trend of credit tightening into real estate, especially high-class real estate.
A home loan with each individual is a significant amount. Therefore, in order to avoid pressure by floating interest rate after the preferential period, homebuyers should prepare a prepayment of at least 30 percent and ensure stable income and increase other incomes.
