Many commercial banks in the country have increased loan interest rates by 1-2 per cent to investors in real estate as property prices continue to rise.

Most commercial banks have raised interest rates on property loans because of soaring prices in the market. – Photo nld.com.vn

Eximbank on May 2 approved new rates for property loans and home improvement loans

The annual interest rate for 12-24 month loans will rise by 1 percentage per year to reach 11 per cent per year for the first two years.

“The demand for loans to buy property in districts 2, 9 and Thu Duc of HCM City continues to rise rapidly. I have to process many loan applications every day, even with the higher interest rates applied,” one bank officer at Eximbank was quoted as saying on the Nguoi Lao Dong (Labourer) newspaper.

VietABank, which is offering loans at 12.38 per cent per year, continues to receive a high number of loan applications.

Resident Ngoc Anh of HCM City’s District 2 said: “I plan to borrow VND1 billion (US$45,000) to buy land lots in District 9. However, after contacting a few banks, I know that loan rates are high and there are no short-term loans at low interest. So I will consider the loans very carefully.”

Because of unstable property prices, the banks are only lending 30-40 per cent of the value of a property they want to buy, not 70 per cent of the value of the asset, as was done previously.

Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam (SBV)’s branch in HCM City, said that SBV had warned commercial banks to carefully consider property loans and issue new regulations to protect themselves from loans to investors who may face losses if property prices stabilise or decline in value. – VNS