Banks tighten loans for real estate businesses

September, 10/2021 - 18:00
The banking industry sharply reduced outstanding loans for real estate business in the first half of 2021 and will continue such limits in the second half.


Many banks have reduced outstanding loans for real estate business in the first 6 months. — Photo

HÀ NỘI —  The banking industry sharply reduced outstanding loans for real estate business in the first half of 2021 and will continue such limits in the second half.

According to audited half-yearly financial statements, many banks have reduced outstanding loans for real estate business in the first 6 months.

LienVietPostBank's financial statements show that outstanding loans for real estate business fell by 52 per cent to VNĐ1.67 trillion (US$72.6 million), leaving the proportion of real estate loans at the bank at only 0.87 per cent. 

At VPBank, outstanding loans for real estate activities decreased by 12 per cent to VNĐ32.4,42 trillion. Meanwhile, the cash flow into personal loans to buy houses, and receive land use rights was still strong, with outstanding loans increasing by 26 per cent to more than VNĐ45.8 trillion.

Outstanding loans for real estate business at ABBank decreased by 13 per cent to VNĐ2.69 trillion, while cash flow was strong and grew in other areas.

At MBBank, loan balance for real estate business decreased slightly by VNĐ75 billion to VNĐ9.32 trillion, while the bank promoted credit flows into other areas such as household employment; wholesale and retail loans; automobiles and motorbikes; as well as manufacturing and processing.

MB's total credit balance increased by 10.9 per cent in the first half of the year and reached more than VNĐ314.9 trillion. Currently, lending to real estate business only accounts for a very small proportion at MB of 3.31 per cent.  

On the contrary, there was some growth in loans for the real estate industry. The outstanding loans for real estate business and consulting activities increased by 3.7 per cent to VNĐ4.91 trillion at ACB, by 11 per cent to more than VNĐ101 trillion at Techcombank, and by 10.7 per cent to VNĐ8.98 trillion at TPBank.

After a survey of credit trends of credit institutions by the Department of Forecasting and Statistics, the State Bank of Việt Nam (SBV) and credit institutions said they would slightly relax their overall credit standards for most customer groups in the last six months of 2021.

However, banks are still expected to tighten loans for securities, real estate, finance, banking and insurance and tourism.

During the pandemic, though there has been reduction in lending interest rates to support businesses and people, and some banks have emphasised that support has not been applied for real estate business but by businesses providing accommodation services, restaurants, and manufacturing businesses that were essential for the economy. 

Vietcombank recently said that it would continue to reduce interest rates up to 0.5 per cent per year for all outstanding loans of customers in HCM City and Bình Dương province and reduce interest rates to 0 .3 per cent per year for the entire loan balance of customers in other southern provinces and cities that apply social distancing according to Directive 16.

However, the bank noted, the above interest rate reduction does not apply to securities loans, real estate business loans and mortgage loans of valuable papers.

Meanwhile, many real estate businesses said they faced many difficulties in the pandemic and suggested that the banks should reduce the support interest rate for them as well.

Nguyễn Thị Thanh Hương, general director of Đại Phúc Land Company, told local media: “Real estate company are facing many difficulties, especially cash flow when their revenue stagnated in the pandemic but they still have to pay the bank interest and interest from borrowing from other sources without any support.”

Hương asked the banks to consider reducing interest rates, and freezing debts for real estate investors to have more resources to develop projects to launch in the fourth quarter of the year.

Previously, the HCM City Real Estate Association (HoREA) sent a written request to SBV and commercial banks, asking them to support businesses including reducing loan interest rates by about 2 per cent per year for real estate businesses, investors and home loan customers. 

At the same time, HoREA suggested that commercial banks consider and create conditions for businesses, including real estate businesses, to access new loans for project implementation.  

Responding to the real estate businesses, many experts said that the real estate lending interest rate had been very low for many years, and if it continued to decrease, the risk for the market was very high.

The recent land boom has left banks afraid to pour money into the industry while SBV keeps saying that it will continue to strictly control credit flowing into risky areas, including real estate. 

In order to help those who want to buy a house to live, many banks still have policies to reduce interest rates for their demand. However, they will carefully appraise loans to avoid loosening for speculators, according to experts. — VNS