Funding house purchasing deals, good business for banks

16:44' 24/07/2007 (GMT+7)

VietNamNet Bridge – A lot of commercial banks in Vietnam now have begun providing loans to fund house purchasing deals with the payment by installments. However, the overly high interest rates are discouraging clients. Mr T went to the HCM Housing Development Bank and asked for the loan of VND200mil ($1,250), with which he would buy an apartment worth VND500mil ($31,250). He was told that the bank offers the interest rates of between 1.11% and 1.15% per month; the maximum term of the loans is 10 years. “Who could borrow money with the interest rate of 1.11%?” he questioned. Those who have credit relations with the bank, who can pay debts every month and the pay is equal to 25% of their incomes, the apartments they want to buy belong to projects of enterprises which have relationships with the bank, will be able to enjoy the preferential interest rate of 1.11%. A staff from the Saigon Thuong Tinh Bank, Go Vap Branch, said that the 15-year term loan with the interest rate of 1.11% per month would only be applied to those who borrowed money equal to 70% of the value of the apartments. The borrowers have to have the monthly income of VND20-30mil ($1,250-1,875) to be capable of paying debts. Meanwhile, the An Binh Bank offers the interest rate of 1.15% per month for 20 years, but the apartments clients want to buy must be in Phu My Hung new urban area, and the borrowers must have bank accounts. Many people have become disappointed when hearing about the interest rate policies applied by the banks. They said that the interest rates proved to be too high. Only those who have high incomes and want to buy luxurious apartments and houses can afford such high interest rates. Dau Ngoc Tinh, a staff of a garment company, related he needed to prove that he had the income of VND20mil a month to get the loan of VND200mil ($1,250) with the interest rate of 1.1% per month. Every month, he will have to pay VND6mil ($375) in both principal and interest. However, his actual income is VND10mil per month, and he only can borrow money with the interest rate of 1.15%. Le Thi Huong, a staff of the Phu Nhuan Real Estate Transaction Office, said that her clients all complained about high interest rates. She said that it would be better for clients to buy the apartments of projects, the construction of which is funded by the bank the clients want to borrow money from. (Source: NLD)