Big credit package for social housing

The Ministry of Construction has backed off from the VND110-trillion credit package for social housing proposed earlier, but said it would instead coordinate with the State Bank of Vietnam to deploy a VND120-trillion credit package for social housing, according to its statement released last week.

At a hybrid conference on policies and solutions for the frozen real estate sector on February 17, the ministry put forward the VND110-trillion package which would be sourced from bank recapitalization funds for lending on to builders and buyers of social homes. However, Nguyen Thi Hong, governor of the State Bank of Vietnam (SBV), said this package would require a lengthy approval process and the use of bank recapitalization funds would affect the SBV’s monetary policy.

Speaking at a monthly Government meeting last week, Hong said the central bank would deploy a VND120-trillion package instead, in which leading commercial banks will use their own funds to lend to projects to build social homes and those for workers. The package would require simpler procedures and could be immediately implemented after the Government issues the resolution for removing obstacles for the real estate sector.

The central bank is working with participating commercial banks to prepare sources of funding. Pham Thanh Ha, deputy governor of the SBV, informed that each of the four big State-owned commercial banks, comprising Vietcombank, Agribank, BIDV and VietinBank, would set aside VND30 trillion for the package, which would offer loans with interest rates 1.5 to 2.0 percentage points lower than market levels.

Under the current market conditions, interest rates for these loans would revolve around 10%.