Central bank turns off tap, limits loans for buying property

It also wants them to reduce lending for buying luxury and resort real estate.

However, they can continue to lend to meet actual demand for housing. Sacombank has already instructed its branches to stop providing real estate loans except to employees until the end of June.

Some other banks have said they would limit lending to speculative real estate in accordance with the central bank’s policy.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that real estate is the most profitable loan category for banks with interest rates going up to 11-12 percent.

It accounts for 20 percent of loans owed to the banking sector. But credit growth dropped from 26 percent in 2018 to 12 percent last year.

Property prices have skyrocketed since 2020 as speculators buy and sell quickly, with experts fearing this will deny people with actual need for housing the chance to buy property.