Though banks announced to have sharply lowered lending interest rate for
individual loans and offered many consumer credit packages, in fact, even those
with a good credit standing and good incomes are finding it hard to borrow at
affordable rates from banks.
A survey at HCM City-based
commercial banks showed individual lending rates declined from 17-18 percent a
year to 13-16%. Many lenders are offering fairly cheap interest rate, at only
13.2%. For example, at Vietnam Commercial Joint Stock Bank for Foreign Trade
(Vietcombank-VCB), the lending interest rate of 13.2 percent is for individuals
who have a steady income.
Accordingly, customers with
steady incomes will be given priority to access VCB’s loans at the most
preferential interest rates, the bank said. However, if borrowing 500 million
dong or higher to buy a house, an income of 10 million dong a month is
insufficient to access a loan.
In details customers borrowing
from 500 million dong onwards at the interest rate of 13.2 percent per year,
they will have to pay (both principal and interest) at least 6-7 million dong a
month. Thus, to buy a house worth an average of over one billion dong, the
borrower must have average income above 20 million dong/month to be able to
afford to pay off the loan and make ends meet.
At some other lenders such as Nam
A Commercial Joint Stock Bank (NamABank), Vietnam Commercial Joint Stock Bank
of Industry and Trade (VietinBank-CTG), Saigon Thuong Tin Commercial JS Bank
(Sacombank-STB) and An Binh Commercial JS Bank (ABBank), individual customers
with steady income and collateral can borrow capital at the interest rate of 15
percent per year. This is the maximum lending interest rate for individual
consumer loans that can not be reduced further.
Some commercial banks give
incentives such as Bank for Investment and Development of Vietnam (Bidv)
whereby customers even without collateral just have steady regular personal
income will be given loans at the interest rate of 15 percent per year with the
quick process.
When buying apartments of
projects that are in association with banks, customers will be supported with
the lending interest rate of only 12 percent per year. But, to get the loan at
this interest rate, common customers are difficult to reach because these
apartments often have cost a few billions dong.
Caution with low interest rates
Formerly low-interest rate bank
loans were often based on the original principal balance, but now many banks
are applying the interest rate form of declining balance with the lowest
interest rate. However, when borrowing capital, borrowers should notice most
commercial banks apply periodical interest rate adjustment. Even many banks
offer relatively short interest rate adjustment period plus high band, if
clients are not cautious they could fall into the “trap” for future interest
rates.
For example, at Maritime
Commercial JS Bank, customers can borrow at a preferential interest rate of
0.68%/month for the first three months for all loans with disbursement duration
from July 23 to October 23, 2012. This is a preferential interest rate given by
Maritime Bank for the first credit time.
But after three months, the
interest rate will change based on market lending rates plus a band of 5%. In
addition, many other commercial banks also reduce the first loan rate, but in
the following months, the bank will apply the floating interest rate according
to the market interest rates.
According to the local newswire
Saigon Dau Tu Tai Chinh (Saigon Finance Investment), although lending rates had
fallen and commercial banks are launching many soft credit packages for
individuals, most individual customers do not seem keen on these soft loans.
Bui Tan Tai, deputy general director of Asia Commercial Joint Stock Bank (ACB),
said the individual capital disbursement is still slow. Loans to buy, build or
repair houses are always practical demand and need to be met.
Especially when the interest
rates and property prices are declining to more realistic levels and banks are
boosting lending activities, customers will have more opportunities than ever
before. But along with the forecast that lending rates are still on a downward
trend and real estate prices are not likely to increase anytime soon and
despite the need for bank loans to buy a house or apartments to live, potential
customers still have the psychological expectation of further falls in property
prices.
Therefore, to stimulate the
individual demand, in addition to lowering the lending interest rates,
extending loan term or increasing loan limit on collateral, commercial banks
should consider giving products with flexible repayment period, in accordance
with income and using purpose of loans for individual customers, especially for
people with above average incomes.
VietBiz24
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