HCM City (VNS/VNA) - Many commercial banks in Vietnam have increased loan interest rates by 1-2 percent to investors in realestate as property prices continue to rise.

Eximbank in early May approved new rates for property loans andhome improvement loans. The annual interest rate for 12-24 month loanswill rise by 1 percentage per year to reach 11 percent per year for the firsttwo years.

“The demand for loans to buy property in districts 2, 9 and ThuDuc of Ho Chi Minh City continues to rise rapidly. I have to process many loanapplications every day, even with the higher interest rates applied,” one bankofficer at Eximbank was quoted as saying on the Nguoi Lao Dong (Labourer)newspaper.

VietABank, which is offering loans at 12.38 percent per year,continues to receive a high number of loan applications.

Resident Ngoc Anh of HCM City’s District 2 said: “I plan toborrow 1 billion VND (450,000 USD) to buy land lots in District 9. However,after contacting a few banks, I know that loan rates are high and there are noshort-term loans at low interest. So I will consider the loans very carefully.”

Because of unstable property prices, the banks are onlylending 30-40 percent of the value of a property they want to buy, not 70 percentof the value of the asset, as was done previously.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam(SBV)’s branch in HCM City, said that SBV had warned commercial banks tocarefully consider property loans and issue new regulations to protectthemselves from loans to investors who may face losses if property pricesstabilise or decline in value. -VNA