Banks pours $41 billion in property market in 2023
The bank said lower interest rates, which have been expected to prevail throughout this year, will likely result in a speedy recovery for the market.
A total of VNĐ2.75 quadrillion (US$41 billion) went into the property market in 2023, according to the State Bank of Vietnam (SBV), an increase of 6.75 per cent in comparison to last year.
The bank said lower interest rates, which have been expected to prevail throughout this year, will likely result in a speedy recovery for the market.
In a recent report by the SBV, credit for the market accounted for about 26 per cent of the total outstanding loans last year. As a result, the lending rates for the market in commercial banks including HDBank, Techcombank, VPBank, SHB, MSB, MB, and TPBank increased compared to the end of 2022.
Techcombank had the highest proportion of lending for property development activities, with 35.22 per cent as of December 31, 2023, compared to 26.44 per cent in the same period in 2022. VPBank ranks second with a proportion of property lending at 19 per cent, compared to 14.39 per cent at the end of 2022.
VietBank also recorded a 19 per cent, but this rate decreased by 1 percentage point compared to the end of 2022. Some other banks also saw a surge in the proportion of property lending, such as SHB increasing from 8.33 per cent to 15.45 per cent; and MB increasing from 4.91 per cent to 7.49 per cent.
MSB recorded a slight increase from 8.75 per cent to 8.96 per cent of total outstanding loans, TPBank rising from 6.31 per cent to 7.12 per cent, while this rate at Saigonbank remained unchanged at 6 per cent.
According to the report, credit growth in 2023 was recorded at 13.5 per cent, reflecting the banking sector's effort to support the property market. The central bank said it has set a credit growth target of 15 per cent for the year 2024.
VNDirect Securities Company said the gradual easing of "bottlenecks" will help the market recover from the second half of 2024. The security firm said the reduced interest rate will give developers more room in terms of capital, and support housing demand. VNDirect also expects the net profit margin of developers to recover in the coming quarters.
Consumer credit continued to decline, however, reflecting buyers' caution. The mortgage interest rate was reported at 11 per cent, down from its peak of 13-14 per cent in recent years.
"The decrease in interest rates is expected to improve the demand for houses, which strengthens developers' ability to maintain a healthy cash flow. We believe that the residential market has passed the most difficult period and will show clearer signs of recovery from the second half of 2024," said a VNDirect analyst.
To stimulate credit flow into the market, developers said the banking industry should be more flexible regarding credit conditions. Specifically, it could further simplify documentation requirements, shorten approval times, and grant credit in less than one month.
In addition, they called on the Government to extend the restructuring period for loans by allowing the use of 34 per cent of short-term capital for medium- to long-term loans (instead of reducing it to 30 per cent) and extend loan periods for industries directly related to the market. — VNS
