The State Bank of Vietnam (SBV) raised the fund to promote social housing development through lending to buyers and developers.

At a national online conference held in February aiming to promote the development of the real estate market, the SBV Governor said that the central bank discussed with four State-owned commercial banks, namely Vietcombank, Vietinbank, BIDV and Agribank, ways to implement the package.

The Ministry of Construction will cooperate with the State Bank of Vietnam to implement the VND 120 trillion credit package to promote social housing development.

The Ministry of Construction (MoC) said affordable home buyers and developers would be provided with preferential loans disbursed from the package. Priority would be given to homes for low-income earners and workers.

Senior expert of BIDV Can Van Luc said that the credit package would boost the real estate market. The value of the package would be higher if other commercial banks joined in, he said.

Ngo Tri Long, former director of the Ministry of Finance's Market Price Research Institute, said that this was a good idea as the market was in a supply crunch of homes for low-income earners and workers.

The Ministry of Construction has proposed the Government arrange a credit package worth around 110 trillion VND (4.6 billion USD) in the form of financing for commercial banks to refinance social housing projects and housing projects for workers. The 110 million VND package was similar to the 30 trillion VND package implemented in the 2013-2016 period.

Regarding the ministry’s proposal, the central bank said it was necessary to have a package to boost social housing development to tackle the supply and demand imbalance. However, more consideration must be given to the capital source.

The MoC later retracted the 110 trillion VND package proposal, opting for the implementation of the 120 trillion VND package by the State Bank of Vietnam.

According to Luc, the 120 trillion VND package is a program with banks' commitments to provide loans with interest rates 1.5 - 2 percentage points lower than the market rate. Accordingly, the lending rate of this package will be around 10 per cent.

Source: VNA