Lenders' mortgage growth falls to 5-year low: central bank

Mortgages usually account for 70% of lending to the property sector, with business loans making up the remaining 30%, it said in a new report on the development of the real estate and social housing market from 2015 to 2023.

In contrast to mortgages, business loans increased by over 35% last year.

This was because developers lacked other reliable long-term capital sources for their operations.

The ratio of medium- and long-term loans to the property sector funded by short-term deposits has jumped from 24% to 34% between 2015 and 2023, posing a risk to lenders.

"The maturity mismatch can lead to risks for the banking system when borrowers fail to repay their debts in time."

The central bank said the Ministry of Finance should review the stock and corporate bond markets to provide additional long-term capital for the property sector.

Meanwhile, developers need to proactively manage their cash flows and find other sources of funding to reduce their dependence on bank loans, it added.

Loans to the property sector have been increasing rapidly since 2015, achieving growth rates of 12% in 2020 and 15.7% in 2021 during Covid-19.

They had grown to VND2.9 quadrillion (US$115.9 billion) by the end of last year.