Recently, the Vietnam Association of Realtors (VARS) proposed tightening credit policies for speculators to prevent real estate price bubbles.
Accordingly, to reduce the number of people borrowing capital for speculative purposes or using excessive leverage, VARS recommends that credit institutions adjust lending limits by adjusting the loan-to-value ratio, requiring a higher equity payment ratio, or applying higher interest rates to people buying second homes or more.
In addition, the Government can impose regulations on credit quality control, requiring banks to report more details on real estate-related loans, thereby strengthening risk monitoring.
In addition, the government needs to have a policy to loosen credit for first-time home buyers, establish a priority credit mechanism for social housing projects, affordable housing, etc.
Along with limiting speculation, the Ministry of Construction has recently proposed taxing those who own multiple properties.
However, speaking with Lao Dong, financial expert, Associate Professor, Dr. Dinh Trong Thinh said that tightening credit for second homes is very difficult to implement.
Because, according to Mr. Thinh, when customers have enough conditions, can secure the loan, buy with a clear purpose..., there is no reason for the bank to treat them differently from first-time home buyers.
In addition, in the past, when the market was stable, many people used financial leverage to invest in real estate. However, the market is currently facing many difficulties and challenges, so using leverage to invest is very risky.
“The most important thing right now is to increase the supply of real estate, especially the housing segment for the common people: social housing, worker housing, low-cost commercial housing... and not to add measures to use credit tools to regulate,” this expert emphasized.
Sharing the same view, Mr. Le Hoang Chau - Chairman of Ho Chi Minh City Real Estate Association said that tightening real estate credit will have certain potential risks.
Therefore, he believes that credit should only be "tightened" and not "restricted". If necessary, it should only be "tightened" for those who own two or more properties.
Drawing on experience from 2011, Mr. Le Hoang Chau said that "rectifying" credit for owners of a second or more property will have advantages such as preventing a "real estate bubble" and can help direct investment cash flow into production and business sectors.
However, this "straightening" action will limit the access to credit of a group of people which can be seen as an infringement on their property rights.
In addition, many people already own 2 houses but still have practical needs such as renting, saving for children, or long-term investment. Changing credit will cause difficulties for people with real needs like this.
And finally, this action will likely affect market liquidity as the reduction in credit supply will reduce liquidity in the real estate market, making transactions more difficult.
