The banking industry was concentrating on the debt structuring for businesses affected by the Covid-19 epidemic. As for individual customers with small loans, including home loans, it would not be easy to restructure and reduce interest rates as expected.
Talking to the Securities Investment Newspaper, Nguyen Minh Anh (Thu Duc District, Hochiminh City) said that she was paying the principal and interest for a loan of more than 500 million dong previously borrowed at a bank based in the District 1, Hochiminh City, with the interest rate of 12.5 percent per year.
According to Anh, this loan contracted at the beginning of 2019. After six months of enjoying preferential interest rates, the lending interest rate had been applied by the bank since then. Her family had repeatedly requested the bank to lower the interest rate but had not been approved.
The people’s income had been affected by the Covid-19 pandemic, which led to difficulties in repaying loans to buy houses, so banks wanted to reschedule and freeze the debt with the investor.
However, most banks focused on restructuring and rescheduling debts for corporate customers, but not for individuals to buy houses. Customers even had to pay higher interest rates when the promotion period ended.
For example, at Vietnam International Commercial Joint Stock Bank (VIB), the preferential home loan interest in the first six months was 8.5 percent per year; in 12 months at 10.1 percent per year. After the preferential period, the interest payable was based on the 12-month savings interest rate plus a margin of 3.9 percent per year. When calculated, home loan interest rates at VIB was at 11.5 percent to 11.7 percent per year.
At Tien Phong Commercial Joint Stock Bank (TPBank), the preferential home loan interest rate in the first three months was 6.5 percent per year, which in the first 12 months was 9.5 percent per year. When the offer ended, the interest rate was calculated based on the 12-month term savings interest rate plus the amplitude of 3.5 percent per year, which fluctuated at 11.6 percent to 12 percent per year.
With Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank), the fixed home loan interest rate was 11 percent per year in the first year, then it was calculated by the 13-month savings interest rate plus the amplitude of 4.7 percent per year, as 12.5 percent per year.
In banks with the state capital, home loan interest rates were lower. For example, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) offered 12 months’ preferential interest rate for buying a house was 7.7 percent per year, which of the 24-month term was 8.4 percent per year and the 36-month term was 9.2 percent per year. After the preferential period, the rate would be equal to the 24-month savings interest rate plus a margin of 3.5 percent per year. Vietcombank’s mortgage interest rate after 36 months was about 10.5 percent per year.
Compared with domestic banks, foreign banks applied quite competitive lending rates for home loans. For example, Hong Leong Bank applied the interest rate of 6.75 percent per year for the first six months, 7.75 percent per year for the first 12 months, and 8 percent per year for the first 24 months. Then the interest rate was calculated based on the base rate plus a margin of 1.5 percent per year, which was about 10.4 percent per year.
However, loan conditions for home buying at foreign banks were somewhat stricter, especially the proof of income, not just as collateral.
The State Bank of Vietnam had just issued Circular 08/2020/TT-NHNN amending and supplementing some articles of Circular No. 22/2019/TT-NHNN, including delaying the roadmap to reduce the rate of using short-term capital for medium and long-term loans of banks by one year, creating the expectation that capital would flow back into real estate.
However, in the current epidemic context, this expectation was difficult to come true, when the real estate market was also affected, banks would be more cautious in lending this area to prevent bad debt.
The general director of Viet Capital Commercial Joint Stock Bank (Viet Capital Bank), Ngo Quang Trung, said that asset quality was always on top of banks, so output credit was always controlled tightly. Therefore, even in the context of low credit growth, it was difficult for banks to lower lending standards.
