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Lower loan interest rates could revive property market: experts

If bank lending interest rates drop to below 10% and remain steady, money will return to the frozen real estate market, experts reckon.

Lower loan interest rates could revive property market: experts

Doan Chi Thanh, business director of Khoi Thanh Construction and Building Business Company, said the real estate market liquidity would improve if the rates decrease to 9-10%, but not if they remain at 13-14% or fall only to 12-13%, when people would opt to hold on to cash and bank deposits.

The CEO of a property developer in Ho Chi Minh City said if the rates are cut to around 9.5%, legal and administrative issues faced by property developers are resolved and the economy improves, the market would recover.

The current rates of around 13.5% are high and are preventing money from flowing to the market, the CEO said.

The central bank recently reduced the deposit interest rate cap for terms of less than six months, and over 20 banks cut their deposit rates, bringing the peak rate down to 8.5%.

Compared to two weeks ago rates are down by an average of half a percentage point for terms of less than six months, and by 0.2-0.3 percentage points for longer terms.

Meanwhile, the real estate market has remained illiquid, with sales of apartments and townhouses declining by 80-90% year-on-year so far this year.

Many people, despite needing to buy houses to live in, are not investing and staying out of market.

Pham Anh Khoi of the Vietnam Association of Realtors said a large amount of deposits mature in the third quarter, and if interest rates decrease to 6-7%, some of the money would enter the property market.

Needless to say, if confidence in the market remains low, people would continue to deposit money in banks despite low interest rates, he added.

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