Average home loan interest rates may increase slightly from the beginning of this year due to rising capital costs, analysts forecast.
However, the home loan interest rates will be still lower than that before the COVID-19 pandemic, thanks to stable mobilisation interest rates and low inflation in 2025. The low rates will support the growth of the real estate market.
Home loans will continue to recover with a growth rate of about 15 per cent in 2025, in both the primary and secondary real estate segments, as supply continues to be strongly supplemented.
Under a 2025 housing real estate industry outlook report released recently, analysts of the Saigon Securities Incorporation (SSI) said the rate rise needed to be seen in the context that residential real estate is expected to grow in 2025, thanks to a positive economic outlook and increased new supply, pushing demand for home loans to rise.
Analysts of the Vietcombank Securities Company (VCBS) also forecast home loans will continue to recover with a growth rate of about 15 per cent in 2025, in both the primary and secondary real estate segments, due to supply.
According to the SSI’s report, preferential home loan interest rates in 2024 were at the lowest level ever. Specifically, interest rates fluctuated from 5.3 to 7.2 per cent per year last year due to reasonable capital costs and fierce competition among domestic banks to attract home buyers.
However, since the beginning of November 2024, some domestic banks such as Agribank, Techcombank, VIB and MB have slightly increased their deposit interest rates. The average deposit interest rate rose from 4.8 per cent per year to 5.5 per cent per year in the second half of 2024. The reason for the rate increase is due to higher credit growth compared to the previous year, which has caused a cash shortage during the high credit season from Q4 2024 to Q1 2025.
In addition, higher profit margins from other investment channels, such as gold and real estate, have also reduced people's demand for bank deposits.
Therefore, SSI’s analysts predict that higher capital costs will cause average home loan interest rates to increase slightly from early 2025. However, they expect that stable rising interest rates and low inflation in 2025 will keep preferential home loan interest rates still lower than that in the pre-pandemic era, supporting growth in the real estate market.
Experts also said the demand and potential of the home loan segment is still very large. However, more time is needed for real estate developers to remove legal obstacles to increase the supply of reasonably priced products. These are expected to reduce the housing price level and stimulate home loan demand to return to an average growth rate of more than 20 per cent per year, as in the period pre-2022.
Banks will continue to increase credit flow into the real estate business channel to increase real estate supply in the future, which will promote demand for home loans for both living expenditure and investment terms.
