Property credit grows faster than in previous years: central bank

Of the VND2,330 trillion ($98.07 billion) in property loans, two thirds went to personal purchase, and the rest to development, said Governor of the State Bank of Vietnam Nguyen Thi Hong at a forum Thursday.

Property accounted for 20.66 percent of all loans, she added.

The figures were released after property developers and experts had raised concerns about the central bank’s tightened policy on property development this year.

Some developers have said they would slow down their investment in the second half of the year due to lack of funding as banks said they have reached their limits on property loans.

Huynh Phuoc Nghia, a senior consultant at Global Integration Business Consultants, said buyers have held back amid lack of credit, which could cause a crisis in the property market this year.

Governor Hong said although property loans play an important role in the economy, they need to be controlled due to high risks.

Property loans are often mid- or long-term, with 94 percent of current outstanding property loans to be paid back in 10-25 years. These loans stem from short-term bank capital, with 80 percent comprising short-term deposits.

This means that if credit organizations fail to keep an appropriate balance between mobilizing capital and providing credit, they could face risks in liquidity and not have enough money for customers to withdraw, she added.

The State Bank’s policy is to steer credit flow toward manufacturing and business, especially to the sectors prioritized by the government, Hong said.

Prime Minister Pham Minh Chinh said Thursday that banks need to be flexible in offering property loans to keep the sector growing while limiting risks.

Projects that meet the legal requirements should receive funding, and credit should also go toward social housing projects to increase supply, he added.

The central bank maintains a credit growth target of 14 percent for the economy this year, compared to 13.6 percent in 2021 and 12 percent in 2020.

Credit growth was 9.35 percent in the first six months.