The need for property loans

The property market in Vietnam became hot in October 2006. The need for property loans increased rapidly, prompting banks to pump an abundance of money into the market. There appeared many forms of home loan services with repayment by installments spreading over 20 years. When real estate prices went sky-high, a wave of speculation in property, which was swelling up, created a property bubble.

According to the State Bank statistics, by the end of April 2008, loans for real estate projects amounted to VND135 trillion ($7.94 billion), accounting for 10.8 per cent of the entire system’s lending. Property-mortgaged loans, meanwhile, accounted for 27 per cent of the total outstanding loans for individuals and the community, equivalent to nearly VND151.9 trillion ($8.94 billion).