HANOI, April 12 (Engineering Daily) -- The State Bank of Vietnam (SBV) has sent announcement to bank members deploying package of VND 30,000 billion aid on 28 March 2016, related to stop signing new credit contract for people to buy a house according to Decree No. 02/NQ-CP.
In May 2013, the package of VND 30,000 billion that supported the citizens to loan money from the bank with low interest rate to lease or buy the social and commercial house, was activated after a series of circulars and specific guidelines from Ministry of Construction and the State Bank. This program has removed difficulties and stimulated demand for real estate market at the bottom of the crisis lasted since middle of 2011. It received a lot of expectations from citizens as well as authorities. In particular, buyers can loan at interest of 5%/year, during 15 years to purchase land or apartment valued below VND 1.05 billion, while investors could get benefit from land using and renting fee exemption, Value Added Tax (VAT) and Corporate Income Tax (CIT) abatement when they constructs the social housing.
However, during implementation, there were many matters that created difficulties for both sellers and buyers. A lot of disputations about interest rate, loan terms, slow disbursement and strict criteria to borrowers made this package always in “hot” situation. Moreover, during housing loans process, many people complained that procedure was still cumbersome and investors still found the way to profit themselves illegally. Fortunately, thanks to immediate action from authorities, buyers gradually approached housing projects and were able to have their own accomodation.
According to record of the SBV, as of 10 March 2016, the commercial banks have signed loan contracts of VND 30,122 billion with 46,246 customers, and have disbursed following to schedule of VND 21,321 billions. Therefore, the SBV required all commercial banks to stop signing new credit contracts from 31 March 2016. This pushed investors, commercial banks and buyers to be hurry to complete the unfinished agreement before ending date. So dozens of cheap commercial buildings, social housing projects and thousands of customers loosed the good chance to buy and sell the house.
The stop of this loan aid will impact negatively to borrowers. If the bank cannot disburse or disburse partially to the buyers, they do not know how to have enough money to pay, specially, for the project not yet finished. They will think to borrow a commercial bank with high interest rate of about 12-13%/year. The fact is that they do not have collateral or cannot meet the financial requirement set by the bank. Thus they will find an outlaw and black credit agency to loan that is seriously dangerous for them.
In this circumstance, investors have to support the borrowers by speeding up the construction progress to shorten the term of raising capital. It is the good basis for bank to disburse maximum to customers. Nevertheless, it is impossible for the project that has just started because the bank cannot mobilize capital up to 70% for one time.