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Many property investors have been slow in paying back their bank loans because of the slump in the real estate market, independent market watchdogs say.

Compared with late 2007, the price of apartments and land plots has fallen by 30 to 50 per cent this year. And the number of sales and purchases has fallen dramatically, Le Xuan Nghia, director of the State Bank of Viet Nam’s Stragety Department said.

According to property brokerage companies, up to 80 per cent of investors have used capital raised from local bank loans.

The number of loans peaked last June, when banks vied with one another to offer the best rates to borrowers.

Banks last year were also offering more loans to individuals who wanted to buy apartments, with a 10-year loan equivalent to 70 per cent of the asset’s total value.

Several banks raised their lending rate to 90 per cent of the apartment’s value, with a maturity of up to 30 years. Many borrowers had only to pay the interest and not the principal for the first three years of the loan.

But today, many domestic banks have had to limit their lending to 30 per cent compared with 54 per cent.

Many banks have temporarily stopped the disbursement of loans for real estate projects, contributing to the real estate slump.

Some banks have said they might try to assess the current real value of the mortgaged assets of investors to determine a new schedule of debt payments.

Many mortgaged properties have dropped in value in the last six months.

Selling the mortgaged assets of investors who cannot pay their debts may be one option to retrieve capital, banks said. But banks said this would be a last resort as the time needed to sell mortgaged property could take several years.

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