HÀ NỘI – The State Bank of Việt Nam (SBV)’s Governor Lê Minh Hưng has asked commercial banks to issue instructions for lending to social housing early to speed up disbursement of the housing stimulus package.

Lending for social housing had stalled in recent months as buyers and commercial banks awaited for guidelines on the extension of deadline for the disbursement of the package worth VNĐ30 trillion (US$1.34 billion) in preferential loans.

The central bank’s Circular 25/2016/TT-NHNN which came into effect on August 1, said that the disbursement to home buyers would be extended to December 31 for contracts signed before March 31. The previous deadline was June 30.

HCM City Real Estate Association, however, proposed the central bank not set the deadline for the disbursement of the remaining loans of the VNĐ30 trillion package.

Still awaited

When the VNĐ30 trillion package neared its end in June, Prime Minister Nguyễn Xuân Phúc asked the Việt Nam Bank for Social Policies (VBSP) to provide a preferential interest rate of 4.8 per cent per year on existing outstanding loans to social housing buyers.

Two months have been passed since the promulgation of the Prime Minister’s decision but the door to preferential loans remained closed to home buyers due to difficulties in allocating State funding for the programme.

VBSP proposed the Government and ministries allocate and raise funds for housing loans with preferential interest rates from various sources such as central and local budgets, issuing bonds or official development assistance.

Experts, however, said that raising funds from outside-the-State-budget was infeasible due to high interest rates, adding that it was important that the Government allocate the budget for social housing from 2016-20.

According to the Ministry of Construction, the failure in allocating funds for preferential loans would undermine confidence of social housing developers and low-income earners while threatening to push up property inventories.

The construction ministry asked the Ministries of Planning and Investment and Finance to work on allocating funds for the implementation of preferential housing loans.

According to President of the Việt Nam Real Estate Association Nguyễn Trần Nam, Việt Nam could have two packages of preferential loans for social housing purchases, one coming from the VBSP and the other from commercial banks in which the State held controlling stakes.

For the latter, Nam said that those banks should spend at least 3 per cent of their total outstanding loans for social housing.

The interest rates should be kept stable, Nam said, adding that 4.8 per cent rate was reasonable.

Construction ministry statistics showed that 145 social housing projects with 58,500 apartments were completed while 174 others with 139,300 apartments under construction which needed a total investment of VNĐ56.8 trillion. - VNS

VBSP’s requirements of eligibility of preferential loans for social housing buyers (Document 2526/NHCS-TDSV)

• Have monthly savings at VBSP with minimum deposit term of 12 months
• Have money worth 20 per cent of the value of the social housing purchase contract
• Evidences of being subject to social housing policies
• Have incomes and ability of repayment following commitments to VBSP
• A request for loan