Long-term mortgages open property market

16:17' 02/07/2007 (GMT+7)

VietNamNet Bridge – Banks are beginning to widen the time frame on home loan deals from 10-15 years to as long as 30 years as the market matures and consumer incomes rise. Phu My Hung JSC, a real estate developer, has for example recently signed agreements with nine banks to help provide consumers with 20-30 year home loans, including market leaders like Techcombank and Sacombank. Housing agreements, over 25-30 year time frames are already popular in many other countries, says Nguyen Huu Dang, head of marketing at the Housing Development Bank (HDB), and finally Vietnam is catching on to the trend. The HDB, another of the nine banks partnering with Phu My Hung, is even allowing clients to take out mortgages worth the full value of the property. "These new services would offer people with stable incomes more opportunities to buy homes," says Dang. HSBC is even delving into the home loan market, offering clients 25-year deals on 80% of property values. Tran Xuan Huy, a Sacombank deputy director, indicated the bank has just begun its long term home loan programme this month, so it is still too early to determine its success, but foresees huge potential in the market. Sacombank on Wednesday sealed a VND500mil (US$31,250) deal in which the International Finance Corporation, the World Bank's private investment arm, will lend financial support to consumers wanting to buy, build or repair homes. Many other property developers are now searching or have already joined forces with banks to offer loan packages including the Khanh Hoi Import-Export Co in HCM City, which has jumped in bed with Incombank. The two are offering a 20 year loans on 50% of a property's value. Many consumers, though, still struggle with interest rates, which for the time being has curbed the number of financing deals inked. Khanh Hoi reports that 90% of units sold in its latest apartment block have not used long term loan agreements or mortgages. Even at an interest rate of 1% over 20 years, the monthly payments are still high for many consumers, said a Khanh Hoi representative in a recent interview. On a 57sq.m apartment, the monthly fee could be as much as VND6mil (US$375) on a 20-year deal, said the representative. News reports put the average wage of a Vietnamese white collar worker in HCM City at around US$400-1,000. Huy, though, remains confident that the property market will continue to grow this year, which will only encourage more banks to offer new and different home financing products. "This is good for our co-operation [with developers and consumers] and for the domestic real estate market as a whole," says Huy. (Source: Viet Nam Net)