The government will issue bonds to support interest rates for social housing development.

The Government Office has just sent a document to the Minister of Construction regarding interest rate support and removing difficulties for social housing development.

Solving capital difficulties for social housing

Accordingly, the Prime Minister assigned the Minister of Construction to preside over and coordinate with relevant agencies based on the Party's policies, current legal regulations, and the Prime Minister's direction at the online conference to remove difficulties and promote the development of social housing to study and propose a plan to issue government bonds and support interest rates to support investment activities and construction of social housing, and report to the Prime Minister in April 2024.

Previously, in March 2023, implementing Resolution 33 of the Government, the State Bank directed 4 commercial banks to commit to a support package of 120,000 billion VND for loans to buy and invest in developing social housing with lending interest rates 1.5-2% lower than the average commercial loan interest rate of 4 banks.

And every 6 months, the State Bank will base on commercial loan interest rates in the market to adjust the loan interest rates of the 120,000 billion VND package.

At the Government's online meeting on social housing development on March 16, 2024, the State Bank informed that TPBank had committed to spend about VND 5,000 billion on loans for social housing development, increasing the size of the incentive package from VND 120,000 billion to VND 125,000 billion.

However, the difficulty with the current preferential loan package for social housing development lies in the loan procedures and interest rates of this package, which are not really attractive to both home buyers and project investors.

Interest rates and preferential loan terms are not attractive yet.

According to the Ministry of Construction, up to now, 28 localities have announced a list of 68 social housing projects eligible for loans from the VND120,000 billion credit package, with a loan demand of more than VND30,000 billion.

But so far, banks have committed to providing credit for 15 projects with an amount of about 7,000 billion VND, of which 8 social housing projects in 7 localities have received loans with an amount of about 640 billion VND.

Specifically, BIDV has disbursed VND95.7 billion to three project investors in Phu Tho, Thanh Hoa and Binh Duong provinces.

VietinBank has disbursed a loan of 128.6 billion VND to a project investor in An Giang province.

Agribank has disbursed 415.7 billion VND to 4 investors in Bac Ninh, Quang Ninh, and Kien Giang provinces.

The Ministry of Construction said that the announcement of the list of social housing eligible for loans is still limited. Currently, there are 129 social housing projects, with a scale of 114,934 units, that have started construction.

However, only 28 localities have announced a list of 68 projects eligible to borrow the preferential credit package of 120,000 billion VND.

Thus, there are 59 projects that have started construction but have not been included in the list of eligible local loans.

These limitations, according to the Ministry of Construction, are due to the fact that some social housing project investors do not meet the conditions for loans such as: not meeting credit balance conditions, not having other assets to secure credit (because social housing projects are exempt from land use fees, so they are not eligible for mortgages).

Regarding interest rates and interest rate periods of social housing projects, the Ministry of Construction also said that although the State Bank has twice lowered interest rates on capital sources of VND 120,000 billion, the interest rate applied in the first half of 2024 is 8%/year for investors and 7.5% for home buyers and the short preferential interest rate period (3 years for investors, 5 years for individual customers) has not really attracted borrowers.