According to the Vietnam Association of Realtors (VARS), the rapid increase in home loan interest rates has led to a more frequent appearance of "loss-cutting" sales, particularly in the apartment segment.

VARS notes that this is not a universal market trend. The loss-cutting phenomenon stems mainly from a group of investors who entered the market previously using high financial leverage, specifically loans with principal grace periods and preferential interest rates. As these preferential periods end, rates then transition to floating levels. Amid a high-interest-rate environment, increasing financial pressure has forced these investors to sell to restructure their cash flows.

Additionally, many investors purchased real estate driven by the "Fear Of Missing Out" (FOMO), accepting price markups in the hope of short-term flipping." As the market stagnates and liquidity declines, this group of investors is forced to cut losses to minimize risk.

Practical observations show that real estate loan rates have surged over the past month. Vietcombank, for example, announced a 6-month fixed package at approximately 9.6 percent per year, which can rise to 13.9 percent if fixed for the first 24 months.

Home loan rates at joint-stock commercial banks have increased by 1-2 percent per year compared with earlier levels. At ACB, the first-year home loan rate stands at 8.3 percent per year, while the 24-month rate is 8.8 percent per year. Preferential rates of 5–6 percent per year for apartments have officially disappeared, with the common preferential level now around 8 percent per year.

Although loss-cut selling is not a market-wide trend, rising listings combined with increasingly cautious buyers have slowed liquidity in certain areas.

According to VARS, the market landscape has changed markedly since the beginning of the year. Home prices remain high, mortgage rates have increased, and stricter lending standards have made once-effective strategies such as short-term flipping and high leverage far less viable. The market is gradually shifting from the pursuit of quick profits toward long-term affordability and financial security.

“In the coming period, many preferential home loans signed in 2023 will, after two to three years of low interest rates and principal grace periods, simultaneously switch to floating rates. At that point, actual interest payments could rise sharply, far exceeding initial calculations, especially for those using high financial leverage. Even first-time homebuyers who accessed preferential loan packages will face interest rate increases faster than expected, disrupting their financial plans,” VARS warned.

Lowering home prices

According to VARS, higher interest rates have an effect in curbing real estate speculation. However, if interest rates remain excessively high for a prolonged period, people will face greater difficulty accessing housing, while developers will struggle to launch new projects. As a result, supply may contract, worsening supply–demand imbalances.

Conversely, keeping rates too low for too long will trigger new speculative waves, as seen in previous cycles.

VARS argues that the issue is not simply whether to loosen or tighten credit, but to regulate interest rates and credit flexibly and selectively, ensuring capital flows toward the right targets, controlling speculative risks without choking off genuine housing demand.

Speaking at a recent real estate conference, Can Van Luc, Chief Economist of BIDV, said that rising interest rates stem from three main factors, including the capital supply–demand imbalances, competitive pressure from other investment channels, and resource allocation priorities. Real estate is not an absolute priority sector, so lending rates for real estate investment and business are higher than the general average.

In this context, Luc recommended that enterprises restructure cash flows and project portfolios, diversify funding sources rather than relying solely on banks, and avoid overly scattered investments.

In particular, businesses should adjust selling prices and work alongside the government and the public to bring price levels back to more reasonable ranges, viewing this as an ethical and sustainable approach.

From a corporate perspective, Nguyen Vu Cao, Chair of Khang Land, said that despite rising capital costs, the market still records transactions in certain segments. These are mainly driven by end-users with accumulated savings, high-income groups less dependent on borrowing, and investors with stable rental cash flows. This shows that genuine demand still exists, but the market has become more rational and selective, forcing both buyers and developers to change their approach.

Hong Khanh