No ban on lending to buy future homes

In response to concerns about a ban on loans for future home purchases, the State Bank affirmed that Circular 22 does not restrict the right to purchase this type of real estate.

The State Bank recently issued Circular 12, amending and supplementing a number of regulations on capital adequacy ratios for banks, effective from July this year.

The new circular reduces the risk coefficient when lending for the purpose of buying social housing compared to loans for buying real estate and other housing. Accordingly, loans for buying social housing will be classified with a lower risk coefficient when calculating the capital safety ratio for banks. This move is to create room and encourage banks to disburse loans for the purpose of buying social housing according to the Government 's policies and projects.

In addition, Circular 22 also reduces the risk coefficient for the form of credit granting to finance industrial real estate business projects from 200% to 160%. Loans serving the purpose of agricultural and rural development are also applied a risk coefficient of 50%.

Regarding regulations on loans for real estate and other housing, the State Bank affirmed that they remain unchanged compared to before.

In response to recent concerns from the Vietnam Real Estate Association (HoREA) about banks being banned from lending for future housing, the State Bank said that Circular 22 does not change regulations on lending for this type of housing, nor does it restrict the rights of organizations and individuals to buy future housing.

Under current regulations, loans to purchase and implement real estate projects and secured by the real estate or projects formed from the loan are defined as real estate-secured loans.

A loan is defined as a home mortgage loan that must meet the following conditions: the source of repayment is not from the rental income of the house formed from the loan, the house has been completed for handover according to the sales contract, the house formed from the loan must be independently valued...

According to current regulations, loans for purchasing real estate, housing and mortgages using future assets apply a risk coefficient from 30% to 120% depending on the loan-to-value ratio (LTV) calculated as the ratio of the loan balance to the value of the collateral. In case there is no information about the LTV ratio, the risk coefficient is 150%.

Quynh Trang

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