Home loan interest rates on sharp upward adjustment

Rising mortgage rates are reshaping the entire real estate market, from investors and speculators to end-users.

- By Bich Hang

By late February, home loan rates at many banks had been adjusted sharply upward, from a common range of 6-8 per cent per annum to around 12-14 per cent, and in some cases as high as 15 per cent for certain short-term periods.

Several banks have significantly revised their fixed-rate offerings. For instance, Vietcombank is quoting home loan rates starting from 9.6 per cent per year, while BIDV offers minimum rates of 9.7 per cent for a six-month fixed term, 10 per cent for 12 months, and up to 13.5 per cent for 18 months. Private banks are also pricing around 10 per cent for 12-month fixed terms, with floating rates ranging from 11 to 15 per cent depending on borrower profiles.

According to Nguyen Minh Hanh, director of the Analysis Centre at SHS Securities, rising interest rates are reshaping the entire real estate value chain, from leveraged investors to end-users.

"Investors using bank loans will have to recalculate their investment strategies as floating rates exceed 12-13 per cent per annum. Short-term flipping gains are unlikely to offset higher capital costs, leading to reduced purchases and a growing need to exit positions," Hanh said.