Low-income families wary of preferential real estate loans
26-04-2013
Worries
Nguyen Thi Minh, from District 1 in HCM City, said that her family was happy with the regulation but worried about interest rates after the initial three-year period.
“It would be great if the 6% interest rate was extended ten years instead of just three. We may not be able to pay off the debt if the interest rates increase after the first three years,” Minh said.
Truong Xuan Tam, attorney and Vice Chairman of the Ba Ria – Vung Tau provincial Lawyers’ Association, said even though the 6% interest rate is much lower than the current market interest rates, the three-year term is too short for borrowers to adequately plan to pay off their debts.
Le Hoang Chau, Chairman of HCM City Real Estate Association, said, “People are still hesitant apply for the preferential rates because they feel insecure about what their rates will be in the future."
Several members of the public have proposed that preferential rates be extended to 20 years.
Nguyen Viet Manh, Director of the SBV’s Credit Department, said that after the first three years the SBV would announce new interest rates that are suitable for low-income borrowers while taking into account changing economic circumstances.
“If the macroeconomic outlook stabilises, interest rates may fall as low as 4% or 5%," Manh added.
Unfair
Economists have said the draft regulation banning people from using preferential loans for the purchase of social housing is unfair, as most of these families are low-income in the first place.
The SBV’s Credit Department said there isn't sufficient legal framework in place to guide the market for social housing.
However, Le Hoang Chau said the department’s explanation is unsatisfactory as the Law on Housing stipulates that social housing can be bought, rented or leased. The use of such preferential loans to buy social housing is in accordance with the Ministry of Construction’s regulations on turning commercial housing into social housing for low-income families.
Deputy Minister of Construction, Nguyen Tran Nam, said the ministry has proposed that the prime minister add this content to the SBV’s draft regulation so as to allow using such loans in buying social housing. This is expected to help stimulate demand and ease oversupply in the market.
Truong Thanh Duc, an attorney and finance expert, said the current slump in the real estate market is mainly the result of speculation. Many people who have real housing demand have been pushed out of the market by the high prices.
“Despite lower interest rates, many people still find it difficult to pay their debts due to unstable incomes. While real estate firms are calling for support from the government to save the market, they don’t bother lowering prices, making government policy in the matter unfeasible,” Duc said.
