Banks slash mortgage rates to decade low
Hoang, a communications specialist, recently borrowed VND1.4 billion (US$56,470) from a state-owned lender to buy a VND4-billion apartment in HCMC.
The loan carries a fixed interest rate of 7.5% for the first three years. Home mortgages typically come with a fixed rate for a certain number of months before it changes to a floating rate.
“Compared to the 12-14% rate on some of my friends’ old loans, I find the current interest rate level much more manageable,” Hoang says. “Luckily, when I found the apartment, I also had some savings so I decided to borrow from the bank to buy it.”
In the first quarter of 2024 many banks offered long-term home loans with interest rates of just 5-6% for the first 6-36 months.
Some bankers say this is “the lowest it has been in over a decade.”
Foreign banks currently offer the lowest interest rates in the market, mostly 6% or less, and for as long as three years.
Nguyen Thanh Hai, regional head of South Korean lender Shinhan Bank Vietnam’s HCMC branch, says the fixed interest rates for mortgages at his bank are around 5.5-6% per year, nearly half the 9-10% rate prevalent in the second half of 2023.
Borrowers can opt for 5.5% for the first six months or 6% three years, he adds.
At state-owned Agribank, Vietcombank, VietinBank, and BIDV, the fixed interest rates on mortgages are 5-7%, or slightly higher than those offered by foreign lenders.
Private lenders such as BVBank, SHB and ACB charge 5-8% but for shorter periods than foreign banks.
Fixed mortgage rates
| Bank | Fixed mortgage rate (%) | Period |
| Shinhan Bank | 5.5-6 | 6-36 months |
| Woori Bank | 5.1-5.7 | 12-36 months |
| BIDV | 5-5.5 | 6-12 months |
| Vietcombank | 6.3-7.5 | 6-36 months |
| Agribank | 6,5 | 24 months |
| BVBank | 5-7.5 | 5-12 months |
| ACB | 7.3-8 | 3-12 months |
*A floating rate is applied after the fixed period.
The floating interest rates are also falling by 2-3 percentage points at some banks.
Private lenders charge high rates of above 12%, while state-owned ones charge 9-10%.
Floating mortgage rates
| Bank | Floating mortage rate (%) |
| Shinhan Bank | 8.5 |
| Woori Bank | 8.7 |
| Vietcombank | 9 |
| BVBank | 9.5 |
| VIB | 9-10 |
| TPBank | 11,6-12.1 |
| HDBank | 12-12.5 |
*Floating rate = Base rate + fluctuation depending on banks.
Experts believe that by the time floating rates are applied to current loans and those in the near future, they will be lower.
The loan interest cuts come at a time when banks are in a race to attract new borrowers and spur credit growth.
At the beginning of March loans outstanding were 0.72% down from last December, indicating that capital is not flowing into the economy, according to the State Bank of Vietnam.
The deputy CEO of a state-owned bank says that despite deposit interest rates decreasing to record lows, people are still putting their money in banks.
This poses a problem for banks as they now have abundant cash but no one to lend it to, the executive says.
They add that most banks are shifting their focus from business loans to consumer loans, and reducing interest rates across the board.
Hai of Shinhan Bank notes that the real estate sector is receiving special attention from the government as it is directly related to the housing needs of the public.
The government and relevant agencies are seeking measures to support both property developers and consumers.
Cutting lending rates can achieve that by lowering costs for developers and making home buying easier, he explains.
“This is a great opportunity for people who want to borrow money for a house.”
