Vietnam lenders still ready for housing risk despite central bank tightening
Recent draft circular proposes to make adjustments to Circular 36/2014/TT-NHNN
Vietnamese banks still have abundant liquidity and are equipped to lend to risky sectors such as property, Viet Nam News reported, citing central bank officials.
Nguyen Quoc Hung, director of the State Bank of Vietnam’s credit department, reassured media that the recent draft circular would help the central bank manage liquidity risks. However, “though we all know real estate is a business with high risks, it does not mean the banks restrict lending to the sector,” he said.
The draft circular sets the risk weight asset ratio to 150 percent for mortgages worth VND3 billion (USD126,000) and 100 percent for loans worth VND1.5-3 billion. The current ratio for both loan types is 50 percent.
More: Vietnam’s most vibrant architecture practices
It also aims to gradually reduce the ratio of short-term deposits used for medium- and long-term loans until 2022. It will be reduced from 40 percent to 30 percent by July 2020.
Tightening access to credit for home purchases is unnecessary since the residential sector drives other sectors such as construction as well as cement and steel production, according to a spokesman for the Vietnam Real Estate Association.
Hung countered that credit tightening will be enforced equitably on all sectors. “Banks do not lack capital but need to limit risks. So they will only lend to effective projects that meet legal requirements and prove to be profitable.”
Outstanding loans to the real estate sector rose 3.29 percent in the first quarter of 2019.
Recommended
Why everyone is moving to Selangor and Johor: Malaysia’s real estate comeback
Malaysia’s upturn in fortunes is especially prevalent in secondary destinations such as Selangor and Johor
Penang’s silicon boom: How the US-China tech war is supercharging local real estate
Penang’s booming semiconductor industry has created ripples within the local real estate sector
New leader, new opportunities: How Hun Manet is shaking up Cambodia’s real estate game
Hun Manet is overseeing decent economic growth and widening access to the country’s real estate market for foreigners
Singapore embraces inclusive housing reforms amid resilient demand
The Lion City’s regulatory strength continues to exert appeal for international investors