Realty market warms up, boosting bank credit growth  

View of a residential area in Hà Nội. Real estate credit growth has significantly contributed to the total credit growth of the banking industry. — Photo cafef.vn

HÀ NỘI — Real estate credit growth has significantly contributed to the total credit growth of the banking industry as the realty market has warmed up.

According to statistics from the State Bank of Vietnam (SBV)’s HCM City branch, real estate credit in the city has maintained a positive growth rate in the past three months. Specifically, March saw an increase of 0.96 per cent and the rise for April and May were 1.15 per cent each. Housing credit accounted for the highest proportion of 67.78 per cent of the city’s total real estate outstanding loan.

Việt Dragon Securities Company (VDSC) said because the demand for buying houses is still very high, real estate loans will likely lead retail credit growth of the banking industry in 2024.

In the first quarter of 2024, real estate lending was an area that accounted for a high proportion of credit growth for many banks, in spite of strains in the market.

VBPank General Director Nguyễn Đức Vinh said real estate has lots of potential, bringing great benefits to the bank.

Though real estate bad debts have increased rapidly, banks can recover almost 100 per cent of principal when the market bounces back and the principal loss rate of real estate loans was much lower than that in other fields.

Leaders of many banks also affirmed even when the economy faces difficulties, banks are still not afraid to lend real estate investors if the real estate projects have full legality. Although the real estate market has been struggling recently, lending in this field still has a lot of potential.

Nguyễn Đức Lệnh, deputy director of the SBV’s HCM City branch, said in the context of low capital absorption in the economy, the growth of the real estate market will have a positive impact on other industries, including banking.

Lệnh believes the real estate credit accounts for a high proportion, so a positive growth of the real estate credit not only promotes banking credit growth but also has a great social importance.

Credit rating agency VIS Rating expects that credit growth in 2024 for the real estate business sector, including investment in real estate corporate bonds by commercial banks, will recover as legal problems are gradually removed.

To boost the real estate credit, experts said additional policy support is needed, such as loan packages with longer terms and more stable interest rates to minimise risks for home buyers.

An improved housing supply will also encourage people to look for opportunities to buy houses, which will be a main driver for bank credit to grow better. — VNS   

Low interest rates for home loans

Interest rates for land and home loans at many banks are staying at the lowest level in many years.