Tighten real estate loans, home loan interest rates may increase, land prices remain stationary or decrease

Recently, the State Bank has required strict control of credit in potentially risky areas, including real estate business. Therefore, there have been a number of commercial banks that have moved to ‘tighten’ lending and stop lending to the real estate sector.

How will this affect the real estate market, who will be affected and how will real estate prices increase and decrease?

According to experts, tightening real estate loans, homebuyers to live in will be under pressure of interest rates that may increase further; and land prices will stay steady or decrease….

Share with PV Infonet, Economic expert Dinh The Hien said, it can be seen that the real estate ‘couple’ and commercial banks have been together for many years in terms of credit granting by banks, and real estate has therefore increased sharply.

However, since 2019, the management agencies have realized the risks to real estate lending activities, so they have “tightened” credit pouring into this sector. In 2020-2021, while banks reduce the rate of credit growth in real estate, corporate bond issuance is very strong, with the majority of bondholders being banks and gradually becoming more tightly controlled.

“When credit is “squeezed”, real estate will definitely face difficulties. Difficulties from investors are no longer convenient and easy to borrow, although individual investors may still be able to calculate a good piece of land, accept to pay interest, and “gong” in the period when the price has not increased, but banks dare not lend; leading to investors not being able to buy this land.

Accordingly, the market cannot sell, loses liquidity, creates a spreading chain, the market may go to ‘freeze’. With the real estate business in the strategy of ‘land is king’, get the land first, build later, sell later, it will certainly be difficult in the coming period,” said Mr. Hien.

As for buyers of houses to live in, especially apartments, Mr. Hien said that banks can still lend. However, homebuyers are likely to come under pressure as interest rates are likely to rise further.

Faced with such credit pressure, what will be the next house price?

Answering this question, Mr. Hien said, many people are still confident that land prices will still increase because of the experience of the past 5-7 years. However, he believes that prices in many places will not be able to increase.

“Where land plots and agricultural land are separated, but the ability to ‘turn’ into residential land, exploit business, build houses or rent out is very difficult… have had a high price for several years now, the price will stand still. or reduce prices, but hardly increase prices this year; except for areas where there is a sudden change in infrastructure investment or large enterprises in investment in large industrial zones, “said Mr. Hien.

According to Mr. Dinh Minh Tuan, branch manager of Batdongsan.com.vn in the southern region, credit tightening is not limited to the maximum. However, the ‘tightening’ of credit also affects, first cooling down the real estate market, prioritizing capital in production and business.

“Assume, if you set a room (limit) for bank credit about 20%, of which 8% is for real estate and 12% is for production and business. However, when seeing the real estate market growing very fast, very strong, not 12% goes into production and business anymore, but almost 20% goes to the real estate market.

When the money in the real estate market is money that is not moving, the value creation for the market is low, prices continue to increase but there is no recovery in production and business.

Therefore, the story of the State Bank and the Government is to cool down the market, adjust the capital going into the real estate and business markets. For those who borrow money for the first time or invest in real estate for the first time, they will have the advantage, the price is controlled, “Mr. Tuan analyzed.

According to Mr. Tuan, in 2008-2010, the credit room for real estate loans was very large, up to 25%, leading to when the market moved to tighten credit, there was a wave of real estate selling.

Therefore, in 2022 we have had some tightening moves related to capital inflows into the real estate market. Therefore, for buyers, those who participate in the real estate market without a loan will have an advantage. At the same time, it will make the market more stable and sustainable in the coming time.

ID