A low-income residential area in Son Tra District, Da Nang City. Home buyers will soon be able to mortgage houses they are going to buy, known as "future assets", to get housing loans.— VNA/VNS Photo Tuan Anh

HA NOI (Biz Hub) — Home buyers will be able to mortgage houses they are going to buy, known as the "future asset", to acquire bank loans as of next month.

The future assets that will be eligible to be used as mortgage collateral include existing commercial housing or residential housing belonging to housing projects. Houses being built on land given to borrowers are not eligible to be mortgaged at the bank.

The move is part of a circular jointly issued this month by the ministries of Construction, Justice, Natural Resources and Environment and the State Bank of Viet Nam on housing mortgages, that will take effect on June 16.

The plan will also allow borrowers who don't have any existing mortgages to access bank loans. The value of the future houses – the mortgage – will be set by the buyers and the bank.

House buyers will have to show housing purchase contracts signed by them and housing developers and at least the foundation of the house must be completed before it can be mortgaged to a bank.

HCM City-based Dat Lanh Real Estate Company vice director, Nguyen Van Duc, told Nguoi Lao dong (The Labourer) newspaper that the circular would help people, particularly low-income earners, access loans to buy houses.

Previously, those who wanted to use loans to buy houses were required to put up other items for security, such as houses or land, a condition which many borrowers failed to meet.

Chairman of HCM City Real Estate Association, Le Hoang Ngan, said the VND30 trillion (nearly US$1.5 billion) package launched in May last year offered preferential loans for low income earners to buy affordable housing.

About 4.8 per cent of the package had been disbursed, he said, implying that disbursement speed had been too slow. Ngan said that the current pace had been partly due to borrowers not having assets to mortgage, excluding them from bank loans.

The circular could speed up the disbursement of the package and stimulate the domestic real estate market, he said.

Vice director general of Phuong Dong Joint Stocks Commercial Bank, Truong Dinh Long, said the circular would create more confidence in lending to house buyers.

"The move promotes the bank's credit for individuals and connections between banks and housing developers," he said.

However, both commercial banks and house buyers could be vulnerable to housing firm decisions to halt or stop projects altogether.

Long also emphasised that it was necessary for the bank to assess the competence of housing investors. — VNS