New Initiative to Improve Access to Social Housing Loans

The government is introducing a new scheme aimed at providing low-income individuals with affordable loans to buy social housing, ensuring enhanced financial assistance compared to earlier efforts.

This new initiative was announced during a press conference by the Ministry of Construction on October 17, 2024.

During the conference, Vuong Duy Dung, Deputy Director of the Housing and Real Estate Market Management Department, mentioned that the current 120 trillion VND credit package has not been utilized significantly, even after two interest rate reductions by the State Bank. The limited availability of favorable rates—three years for developers and five years for individual buyers—has not been appealing enough to encourage borrowing.

Unlike the existing 120 trillion VND package, which is financed by commercial banks without state guarantees, a proposed 30 trillion VND funding source will draw from the state budget. This aligns more closely with the government’s focus on enhancing housing affordability and welfare initiatives.

Dung highlighted that the projected need for funding through 2030, in line with the “1 million social housing units” initiative, is around 500 trillion VND, revealing that the current package meets only 24% of this demand.

“To ensure diverse and stable funding for those needing social housing and to meet the project goals, the establishment of a 30 trillion VND loan fund is crucial. This will enable the Social Policy Bank to offer loans for purchasing, renting, building, and renovating homes, thus bolstering social policies at this critical juncture,” Dung explained.

This proposal must comply with various regulations including housing laws, budgetary guidelines, and credit laws. The Ministry of Construction is collaborating with other agencies to ensure the proposal is thorough and adheres to legal standards before it reaches the Prime Minister.

Recently, the Prime Minister instructed the Ministry of Construction, in collaboration with multiple ministries, to finalize the 30 trillion VND credit package by the end of October 2024. This package will support the Social Policy Bank in offering loans for various housing-related needs as part of the social housing initiative.

The funding will be sourced equally from government bonds and local financial contributions, each contributing 15 trillion VND.

Deputy Minister of Construction Nguyen Viet Hung reiterated during the conference that pivotal components of the social housing policy include land-use concessions and favorable loans. These financial aids are designed to assist developers in constructing social housing and help low-income families find affordable living options while giving them more time to stabilize their finances.

In the upcoming months, the Ministry of Construction, alongside relevant ministries, will work to ensure that the proposed credit package is legally valid, practical, and efficient, enabling low-income families to access affordable home loans.

Currently, 619 social housing projects encompassing over 561,800 units have been launched nationwide. Out of these, 79 projects have been completed, offering nearly 40,700 homes; 128 projects are underway with about 111,700 units; and 412 projects, totaling over 409,400 homes, have received investment approval.

So far, approximately 35.6% of the 2025 target, which is set at 428,000 homes, has been achieved.

With respect to the 120 trillion VND credit package, the Ministry of Construction revealed that in addition to four state-owned banks (BIDV, VietinBank, Agribank, and Vietcombank), four other banks—TPBank, VPBank, MBBank, and Techcombank—have also registered to participate, collectively committing an additional 20 trillion VND, thereby raising the total available funds to 140 trillion VND.

As of the end of August, this credit package had disbursed 1.344 trillion VND, with 1.295 trillion VND directed to developers and 49 billion VND to homebuyers.