VNRE - Commercial banks in Vietnam had lent a total of VND210.77 trillion ($10.82 billion) to the real estate sector by the end of July with a bad debt ratio of below 2%, the Ministry of Construction (MoC) said.
The seven-month credits rose 14.38% from a year earlier, in which loans for housing building and repairing were up 5.47% versus last year’s surge of 27.2%.
Loans for new urban area development projects, however, fell 2.35% in the period, compared to a growth of 10.2% last year. High interest rate of above 13% per annum is a major reason for the decrease.
Local banks have tightened real estate lending over fear of repayment risks, slowing credit growth for the property sector.
Pham Trung Cang, a credit official at Asia Commercial Bank, said the real estate market has “hidden risks.”
Developers take out loans to build their projects, and then home buyers get mortgage loans secured by the same properties that are developed using bank loans. That is too risky, Cang said.
Dam The Thai, director of the individual customer department at ABBank, said home buyers are always “at a disadvantage” when they make advance payments for properties whose construction has not been finished.
Commercial banks are cautious with home loans in such cases, Thai said.
In the first eight months of this year, total outstanding loans of local banks rose 16.27%, including an increase of 3.31% in August.