Banks told to control lending for real estate projects
At the ongoing National Assembly session, Le Thanh Van, a deputy from Ca Mau, expressed concern about the development of the real estate market amid information that the State Bank of Vietnam (SBV) has told commercial banks to tighten lending to the sector.
Van said the real estate market plays an important role in the economy and the tightening of credit to the market may lead to serious consequences: the market will become stagnant and the poo, especially poor urbanites, will not be able to buy low-cost housing. Meanwhile, the aims of the state are restricting speculation and preventing real estate bubbles.
“Which solutions for monetary policies do you need to ensure the healthy development of the real estate market?” the deputy asked.
While the watchdog agency affirmed that it has not tightened lending, investors complain that it has been very difficult to seek capital in the last five months.
In reply, SBV Governor Nguyen Thi Hong said there are many subjects in the real estate market, attracting investments from many different sources. Credit is one of the investment channels. Over many years, SBV has been following a principle that credit expansion must be associated with safety and effectiveness. Capital should go to production and business, while lending to risky fields should be restricted.
Real estate is a risky field. To prevent risks, commercial banks only provide loans if clients can satisfy requirements and are solvent. Real estate is a valuable asset and it needs long-term capital to develop, while banks’ deposits are short-term capital. If credit institutions cannot control real estate loans, they will lose capital.
“Credit institutions can negotiate with their clients and make decisions about lending on the basis of ensuring safe operations,” Hong said.
The central bank requests credit institutions to keep cautious when granting loans and regularly re-assess mortgaged assets to identify risks. Real estate outstanding loans by the end of 2020 reached VND2.2 quadrillion.
Regarding the housing supply for low-income earners, Vietnam is applying many policies. Decree 100 regulates the lending via the Vietnam Bank for Social Policies, while the 2% interest rate subsidy package comprises of the capital for social housing development, housing for workers and upgrade of old apartments.