"An employee told me that the bank has used up its credit quota and so lending is difficult."
Though his bank last week had its credit quota hiked by nearly 1 percentage point, he did not receive a call.
"They told me to be patient, but did not say until when."
Long is among many people who have been trying in vain to get a mortgage in the last few months, collateral damage to the government’s tough credit policy meant to ward off speculation and housing bubbles.
The booming property market, in which prices at some locations doubled or tripled at the end of of 2021, began to cool off last quarter after the government tightened lending to the property sector.
With banks saying they have exhausted their credit quotas and cannot lend anew, the State Bank of Vietnam last week increased them for 15 of the 35 domestic commercial banks in the country by 1-4 percentage points.
State-owned Vietcombank, for instance, one of the country’s largest lenders, got a 2.7 percentage point increase to 17.7% for the year, which means it can disburse another VND32 trillion ($1.3 billion) this year.
State-owned Agribank has VND50 trillion, while most other banks in the list have VND20 trillion or less.
However, industry insiders fear these amounts would not be enough to revive the property market.
A credit employee at a state-owned lender, who asked not be named, said despite the credit quota increase, her bank is not accepting new loan applications but is only processing pending ones.
For the 20 banks whose credit quotas have not increased, the situation is even more difficult.
A spokesperson for a foreign bank said lending has fallen to a trickle, and this is likely to continue for the rest of the year.
Phuong Mai of the central province of Quang Nam recently approached a bank for a loan of VND1 billion (US$42,500) to buy an apartment, but the credit officer advised her not to borrow.
"The officer, a friend of mine, said his bank still has many applications to process, and I will have to wait for months if I apply."
‘Modest practical impact’
Tran Khanh Quang, CEO of southern property developer Viet An Hoa, said the increased lending quota "won’t help market recovery. There will still be difficulties in borrowing."
Though the increased quota would help some homebuyers secure loans, generally banks would continue to tighten loans to property developers in the mid- and high-priced segments, he said.
The modest quota increases are likely to run out within eight to 12 weeks and so would not have much practical impact, he said.
The high interest rates on property loans of 12-13% would scare away borrowers since property market transactions and profitability are down, he added.
Phan Cong Chanh, CEO of property developer Phu Vinh Group, said with the government prioritizing inflation control and keeping the currency steady amid global uncertainties, it is likely that loan interest rates would remain high for the rest of the year.
Nguyen Mac Hoai Nam, CEO of Nam Phat Consultancy, said since May homebuyers have had difficulty getting mortgages, and waiting lists are long.
"The modest credit increase will not be enough to revive the market."
Long, who has put down a small deposit for his Hanoi apartment, is concerned he might lose the money if he cannot get a bank loan in time.
"I might have to push my homebuying plan back by a few years."
Dat Nguyen, Vu Le