Ministry of Construction stops proposing 110,000 billion credit package, focuses on 120,000 billion package for social housing

The scale of the Evergreen Bac Giang social housing project includes: 10 apartment buildings, 20 floors above ground and 1 basement. (Photo: Danh Lam/VNA)

After meetings to resolve difficulties for the real estate market since early February, two solutions regarding credit packages have been revealed. The first is the proposal of the Ministry of Construction with a package of about 110,000 billion VND (similar to the previous 30,000 billion VND package), provided to commercial banks to lend for social housing projects and workers' housing in the form of refinancing. This proposal has been included in the draft Resolution of the Government.

The second is a separate credit package of about 120,000 billion VND also for social housing, agreed upon by 4 state-owned commercial banks before the conference with the Prime Minister on February 17. This package has a loan interest rate 1.5-2% lower than the average market interest rate for home builders and buyers.

However, on the afternoon of March 2, in the announcement, the Ministry of Construction did not mention further research on the previously proposed VND110,000 billion credit package. Instead, the ministry said it would coordinate with the State Bank to implement the VND120,000 billion credit package.

Mr. Ha Quang Hung, Deputy Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) explained, "The Ministry of Construction no longer proposes the VND110,000 billion package." Previously, he shared that Governor Nguyen Thi Hong noted the capital source for this package. Because if the source comes from refinancing, that is, providing money for a long time, it can reduce the flexibility in managing monetary policy.

"Using the State Bank's 120,000 billion credit package will simplify procedures and provide resources for immediate implementation," he said.

Regarding the VND120,000 billion package, on the afternoon of March 2, Mr. Dao Minh Tu, Deputy Governor of the State Bank, said that this agency is directing 4 commercial banks to implement the roadmap and general regulations. According to him, this is a commercial loan package, so businesses and home buyers who meet the conditions will be eligible for loans. In fact, many social housing projects have been approved but are not fully legal.

"The spirit of the bank is to urgently launch this package, but the money is available but the project's legal documents are not complete, which is also a problem. Therefore, the mechanism and methods to create the most favorable conditions for borrowers are being discussed, calculated and agreed upon by the four commercial banks," said Mr. Tu.

In response to the opinion that the loan interest rate of the package is not attractive, Mr. Tu explained that the difference between the deposit and lending interest rates of commercial banks fluctuates around 3%. With this credit package, banks will have to "cut" 1.5-2% from the above difference, so their remaining interest margin is quite thin. He added that the scale of this credit package will be as large as 120,000 billion VND if other commercial banks participate in the future.

The representative of the State Bank still maintains the view that the 110,000 billion VND credit package proposed by the Ministry of Construction is necessary for the real estate market, but the problem is where the capital for this credit package will come from.

According to VnExpress