Concerned about the real estate market script will return more than 10 years ago with a long “hibernation” is a basis, especially when the interest rate is having a signal that has not stopped. Experts affirmed that the real estate market is strongly influenced by rising interest rates.

High interest rates have impacted strongly to the market 2008-2012

The interest rate for medium and long-term loans in the period of 2008-2012 recorded very strong fluctuations. If in the period 2000 to 2007, the loan interest rate only fluctuated in about 9-12%, then in early 2008, reflecting the policy of tightening monetary banks of the State Bank to curb inflation and interest rates increased to 18.5% and continued to over 21% at the end of 2008.

In 2009 and 2010, medium and long -term lending interest rates decreased slightly to 12% to 16%. But in 2011, before the high inflation situation returned, the loan interest rate again soared above 20%.

Along with the increase in interest rates is the quiet impact of the real estate market. Many businesses and investors have not been able to surpass the increase in lending interest rates. Bankruptcy, dissolution of a job or trying to hold through the crisis period is a fact that happened more than 10 years ago.

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According to experts, the loan interest rate is often slower than the real estate credit balance and housing prices. But at the time of 2008-2012, interest rates are thought to be the result of the previous real estate market development process. In other words, lending interest rates as policy adjustment tools, reflecting managers’ reactions as well as commercial banks against market risks.

Concerned about the increase in interest rates

Up to the present time, the development of interest rates is happening along with the quietness of the real estate market.

On October 24, the SBV announced the increase in rates of operating interest rates and applied from October 25. Accordingly, the maximum interest rate applicable to term deposits from 1 month to less than 6 months at credit institutions is 6%/year, instead of 5%/year as the old level. Earlier, on September 23, the State Bank increased a series of operating interest rates after the stable time from October 2020 to the present.

The move to raise the operating interest rates of the State Bank leads to the “race” to raise interest rates and lend from commercial banks. Notably, some commercial banks recorded the lending interest rate of up to 14-15%.

From the perspective of TS. Tran Toan Thang, Head of the Economic and Enterprise Economic Forecasting Department, the Ministry of Planning and Investment, the increase in excellent interest rates in the current context is indispensable. This move not only reduces inflationary pressure and expected inflation, but also supports the exchange rate and positive interest rates for depositors.

But according to some experts, the increase in interest rates is one of the reasons affecting the quietness of the real estate market, making it difficult for businesses to access bank loans, lack of cash flow to develop the project. And people do not have capital to buy real estate, the liquidity decreases.

Director JLL Le Thi Huyen said that the issue of interest rates increased and tightened credit certainly could not be removed quickly, so difficulties for the market in general were still short and medium -term. The obstacles of legal barriers, access to capital and fluctuations of the economy continue to affect the new supply.

At the talk show “Capital channel for businesses and opportunities for Vietnam market, Dr. Le Xuan Nghia”, member of the National Financial and Monetary Advisory Council raises the problem, Vietnamese enterprises are being Business with the highest interest rate in the world. This is a strange thing in the lowest inflation country in the world.

According to this expert, Vietnam is maintaining the inflation rate at 3% but the highest deposit and loan interest rate in the world, of which the average loan interest rate is at 10%. Meanwhile, according to the US Department of Labor, inflation in the US in September 2022 was 8.2% but the lending interest rate was still around 2.5%.

Assessing the impact of rising interest rates, PhD. Nghia emphasized that the higher the interest rate, the more financial of the corporate finish. Businesses in all fields including real estate are difficult.

According to Mr. Nghia, the slow liquidity in the banking sector combined with the quietness of the bond market, leading to the stagnation of the real estate field. Although, for real estate fields that still come from many other causes, the problem of weak capital flows and low liquidity is one of the big causes. In general, the problem of liquidity is a common condition of the economy.

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