Relevant authorities should further monitor consumer lending as real estate loans were hidden in consumer loans, experts told Viet Nam Television.

According to State Bank of Viet Nam (SBV) Governor Nguyen Thi Hong, outstanding loans in the real estate area have slowed down compared with 2016, thanks to the resolute instruction of SBV’s governor to credit institutions on controlling credit risks, ensuring balance of capital, maintaining ratio of using short-term funds for medium- and long-term lending and controlling credit in risky areas such as real estate and build-operate-transfer transport projects.

Not only has the real estate credit growth declined, the proportion of real estate loans in the total outstanding loans of the entire banking system has also fallen to just over 8 per cent, the SBV reported.

However, a recent report from the National Financial Supervisory Commission (NFSC) showed that consumer lending by the end of May rose by some 29.7 per cent against the end of 2016, of which home repair loans and home purchase loans accounted for 52.8 per cent of the total consumer loans compared with 49 per cent at the end of 2016.

Consumer loans currently account for some 12 per cent of total outstanding loans of the entire banking system, therefore, if one includes real estate consumer loans, the proportion of real estate lending would reach some 14 per cent instead of 8 per cent as reported, the NFSC found.

It means that real estate loans were hidden in consumer loans as commercial banks continued to circumvent rules on real estate lending.

In its previous report, the NFSC also gave a similar statement and warned that the sharp consumer credit growth, of which some 50 per cent focused on the real estate area, showed that the form of real estate lending was shifting and needed to be monitored and assessed.

Currently, there is no legal regulation on classifying home repair loans and home purchase loans as consumer loans or real estate loans.

Representatives from commercial banks said they currently classify home repair loans and home purchase loans as consumer lending so that lending is not restricted. Meanwhile, real estate lending is restricted according to Circular 06, which came into effect in January this year.

Experts said considering home repair loans and home purchase loans as consumer lending but not real estate lending is unadvisable as it can lead to an incorrect real estate credit growth ratio. This wrong reflection can cause difficulties for State management in the real estate industry.

If lending is not controlled well, with home purchase loans not based on real demand but for speculation, the country will suffer from a real estate bubble and the economy will be unstable, experts said. — VNS