Lending interest rates surge

By Quynh Trang, Minh Tuan   October 22, 2022 | 06:28 pm PT
Lending interest rates surge
A cash transaction at a commercial bank. Photo by VnExpress/Giang Huy
Interest on personal and business loans have increased by about two percentage points to around 13% and 9%, respectively, against early this year, burdening individuals and businesses.

Hang, communications officer with a firm in HCMC, said the interest rate on the bank loan she took to buy a house has surged to 13.5% from over 11% a year. Now, the interest she has to pay each month rises by several million dong ($1=VND24,800).

The director of a transport company in Hanoi said the interest rate on his firm’s bank loan has climbed up by 2.5 percentage points against the beginning of this year. "With a loan of nearly VND2 trillion, we will have to pay an additional interest of more than VND50 billion each year," he said.

A rapid VnExpress study has observed that most banks, both private and state-owned, have raised lending interest rates for individual customers by at least two percentage points against the beginning of this year. Some banks have even stopped offering preferential interest rates for the first year of personal loans, applying floating interest rates right from the outset.

Though lending interest rates have surged sharply, it is not easy to borrow money because several banks have already reached the credit growth limit set for this year. The central bank has said it will not expand the limit.

Vietnam has set its credit growth target of 14% for 2022. So far this year, credit growth was more than 10%.

Central bank governor Nguyen Thi Hong has said it was hard to lower loan interest rates in the coming time since many countries in the world are facing high inflation and fluctuating foreign exchange rates, with many central banks having hiked interest rates recently and planning to increase them further.

The leaders of many commercial banks in Vietnam have also forecast that lending interest rates are unlikely to decrease in the coming time; and that fluctuations will heavily depend on liquidity, especially the disbursement of public investment.

Several experts, meanwhile, have remarked that the average lending interest rate was low in previous years, and is now increasing mainly due to the hike in credit demand as the economy is growing and deposit interest rates are going up.

From January to October, the 12-month deposit interest rate offered by state-owned banks increased by 1 percentage point on average, and that offered by private banks rose by 1-2.7 percentage points. Some private banks have increased their deposit interest rates to 8-9% a year, and some are even issuing certificates of deposit with interest rates of up to 10% a year.

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