Property loans in need of tight control: Deputy PM
Property loans in need of tight control: Deputy PM
The real estate sector remains highly risky, so the Government has tightened control over property credit, Deputy Prime Minister Vuong Dinh Hue told the National Assembly’s sitting on October 22.
Over the past few years, credit growth was high, at between 14% and 18.17% per year over the past five years, whereas the gross domestic product (GDP) grew a mere 5%-6%, the Vietnam News Agency reported, citing the deputy prime minister.
However, the credit growth and economic growth have recently reversed course following the Government’s economic restructuring. The Government has tightened control over credit policies, especially property loans, resulting in a 14% rise in credit growth. Meanwhile, the economic growth was higher than before.
Deputy PM Hue said that real estate credit surged over the past few months of 2019 due to the Government’s change in calculations.
In the past, loans for real estate firms and consumer credit for house buyers were placed into separate categories. However, since last year, the two columns have been merged, leading to the surge in property credit figures, the deputy prime minister stated.
Deputy PM Hue added that if the outstanding loans for a real estate firm or a project reach VND5 trillion or more, the Governor of the State Bank of Vietnam must report on the issue to the Government and the prime minister every three months to ensure tighter control.
Given the credit growth rate of 13.89% in 2018, this year, the banking system targets a credit growth rate of 14% to curb inflation and maintain macroeconomic stability.
As of September 30, credit had risen by 9.4% against the end of 2018, focusing on production and business activities. Meanwhile, credit for high-risk sectors, mainly the real estate sector, has been tightly controlled.
Real estate loans accounted for 19.14% of the total outstanding loans, picking up by 14.58% against the figure seen in late 2018. Of the total, loans for real estate business activities represented 32.7% of the sector’s outstanding loans, up 5.5%.
Consumer credit made up 20.7% of the total outstanding loans in the economy, up 13.9%, of which loans for activities associated with the real estate sector, including buying, renting, building or repairing houses, accounted for 59.4% of the total outstanding consumer loans, soaring 19.5%.
Deputy PM Hue remarked that the Government has ordered tight control over property credit and large-scale projects, asking banks to consider offering loans for feasible projects.
