Higher rates and stricter credit caps reshape lending landscape

Higher rates and stricter credit caps reshape lending landscape

Interest rates are forecast to remain elevated in 2025, with credit flows expected to steer towards productive industries and priority economic drivers.

In late February, Vikki Digital Bank has announced a six-month deposit rate of 8.2 per cent, while the 13-month tenor exceeds 8.4 per cent. Meanwhile, the prevailing six-month deposit rates at other private joint-stock commercial banks range from 7 per cent to 7.5 per cent.

Outstanding real estate loans at each bank must not grow faster than the institution’s overall credit growth rate

Outstanding real estate loans at each bank must not grow faster than the institution’s overall credit rate.

At state-owned commercial banks, six-month deposit rates are currently common at 5.5 per cent-5.8 per cent, per annum, while 12-month deposits hover around 6 per cent, per annum – approximately one percentage point higher than the same period last year.

Lending rates have also shown signs of rising compared to the period before the Lunar New Year holiday.

Short-term loans for production and business purposes are now commonly pegged at 7.6 per cent-10 per cent, per annum.

Medium- and long-term production loans, as well as real estate loans, are typically offered at 8 per cent to 10 per cent during the first three to six months, before increasing to around 10 per cent-12 per cent. In some cases, floating-rates have climbed to above 13 per cent, per annum once entering the adjustable-rate period.

Several bank branches noted that credit disbursement to the real estate sector has become more cautious in the early months of the year.

Before Lunar New Year, BIDV issued a directive to its branches, requesting a temporary suspension of submissions to the head office for new access to corporate clients’ real estate projects and business plans.

The bank later clarified that the move was intended to comply with guidance from the State Bank of Vietnam (SBV) to ensure that real estate credit growth in 2026 does not exceed overall credit growth.

In its latest macroeconomic report, the research team at MB Securities JSC observed that although deposit rates across most banks in 2025 have risen by 100-150 basis points, funding pressures remain evident this year – particularly as long-term borrowing demand increases for public investment and infrastructure projects aimed at stimulating economic growth.

Chau Dinh Linh, a lecturer at Ho Chi Minh City University of Banking, said the upward trend in interest rates in 2026 is understandable.

“Sector-wide credit growth ceilings have been set at lower levels, many banks have reached their caps on the ratio of short-term funds used for medium- and long-term lending, and liquidity at some institutions has at times tightened, limiting lending capacity. Under this trend, a key issue is the impact of higher interest rates on production and business activities in particular, and on overall economic growth more broadly. Lending rates in the real estate sector, notably, have risen more markedly than those in other productive sectors,” he said.

Linh assumed that this would represent a new stress test for the real estate market.

“With the policy stance of caution toward real estate, prioritising capital for economic growth, interest rates are likely to show clearer differentiation in 2026. Another factor influencing rates this year will be moves by the US Federal Reserve. If the Fed cuts rates, Vietnam’s monetary policy space would ease, and interest rates may increase only slightly compared to 2025,” Linh said.

According to Can Van Luc, a member of the Prime Minister’s Policy Advisory Council, higher interest rates reflect supply-demand imbalances in credit and the orientation of capital allocation towards productive sectors.

“Real estate is not a priority sector, so it is understandable that lending rates are higher than the general average. Real estate credit has always been sensitive; it serves as a growth driver but also poses systemic risks if it overheats. The challenge is to avoid over-tightening and disrupting the market, while also not loosening control excessively,” Luc said.

On February 26, Prime Minister Pham Minh Chinh instructed the State Bank of Vietnam to strictly control speculative real estate credit, focus on genuine housing demand, and conduct monetary policy in a flexible and effective manner to maintain macroeconomic stability and curb inflation.

The SBV was also tasked with closely monitoring and directing credit institutions to tightly manage lending to the real estate sector.

Earlier, in a document sent to credit institutions in mid-January regarding credit growth control in 2026, SBV requested that lenders strictly manage credit expansion into potentially risky sectors, particularly real estate.

Accordingly, the SBV requires that credit growth for the real estate sector must not exceed each institution’s overall credit growth rate compared to the end of 2025. Instead, capital flows will be steered towards production and business activities, priority sectors, and key growth drivers of the economy.

VIR