Is real estate credit heating up again?

Credit Reaches 17.2 Quadrillion VND by Mid-2025

By the end of June 2025, total credit across the economy reached 17.2 quadrillion VND, with real estate business loans accounting for 18.47%—equivalent to around 3.18 quadrillion VND. This capital primarily flowed to project developers, while homebuyer demand has been recovering more slowly.

Overall credit growth in the early months of this year has been notably positive, driven by multiple factors. Real estate credit showed better performance than the same period last year and the full year prior. Improvements became more apparent in Q2, with a clear divergence in loan growth across different banks. Notably, smaller commercial banks have posted stronger growth in both RE credit and overall lending compared to larger institutions.

The recovery in RE credit is supported by several key factors:

First, the government has ramped up efforts to remove legal bottlenecks for real estate projects, enabling developers to resume construction and accelerate project rollouts, thereby reopening funding channels.

Second, banks are actively steering capital toward real estate, retail, and consumer-related housing loans amid market recovery. Liquidity in some segments has started to improve. A highlight is the government’s subsidized loan package for social housing targeting individuals under 35 years old. However, due to limited supply in this product segment, end-user mortgage credit remains lower than credit for business development.

Third, the low interest rate environment has boosted borrowing demand for both general and real estate loans.

The improvement in real estate credit has only become clearly visible since Q2 and is expected to maintain positive momentum into Q3 and Q4, aligning with overall market recovery. That said, potential risks—such as tax policy shifts affecting market liquidity—must be considered. Credit will continue to flow into the market, but in a gradual, selective manner rather than in past waves of overheating.

A New Phase of Real Estate Lending

The current phase of RE credit growth marks a new chapter following the "black swan" bond crisis, with several key differences from previous periods.

First, after a period of market filtering and with increasingly stringent legal frameworks, developers have become more cautious with financial leverage and have improved financial governance. Legal documentation for projects now requires greater transparency and completeness. While some developers still face high debt levels, many are undergoing restructuring efforts to resolve legal hurdles and revamp their financial positions.

Second, real estate products are now being redirected toward meeting genuine housing demand, rather than speculation. Buyers are becoming the real drivers of the market, leaning toward long-term ownership rather than short-term investment. Credit is playing a role in supporting these end-users toward sustainable housing ownership.

This shift is influenced by a trio of amended real estate-related laws, most notably the Land Law—expected to provide a strong push for more sustainable market development. Financially strong, experienced, and large-scale developers are likely to dominate in this new era.

As the market evolves, so too do the banks. Higher-quality loan collateral—less tied to speculative projects—contributes to better credit quality and lower risk exposure. Some banks that previously shied away from RE lending, such as ACB, are now showing more openness. This hints at a stronger capital inflow into the housing credit sector.

Lastly, while the government aims to direct credit toward genuine homebuyers, proposed tax measures—like the Ministry of Finance's plan to apply a 20% tax on real estate transfers—also make speculative activity more costly, shifting the advantage toward actual end-users.

Given the current conditions, fears of real estate credit overheating remain unfounded. From now until the end of the year, credit is expected to continue flowing into real estate-related consumption, but in a selective and measured manner.

With rising expectations for improved repayment capacity, the second half of 2025 and into 2026 may see further improvements in RE market liquidity. Genuine homebuyers will likely continue taking advantage of the current low interest rates and preferential policies. Banks with real estate consumer lending portfolios are well-positioned to improve their financial indicators in tandem with overall market opportunities.