Will lower interest rates ease real estate funding?

Right after committing to the State Bank of Vietnam to lower interest rates, several banks took concrete steps. However, according to experts, rates will be unlikely to fall sharply.

Interest rates unlikely to fall sharply

Accordingly, VPBank reduced deposit interest rates for terms ranging from 6 to 36 months, with cuts commonly ranging from 0.3 to 0.5 percentage points per year, while keeping the ceiling rate unchanged for short-term deposits under six months.

Similarly, SeABank also lowered deposit rates for medium- and long-term tenors, with cuts ranging from 0.2 to 0.3 percentage points per year. Even so, short-term rates were kept stable, reflecting caution in liquidity management.

Still, these initial moves show that a downward trend in interest rates is gradually taking shape, although the extent of the adjustments remains exploratory.

According to a survey, home loan rates are still anchored at high levels. At Vietcombank, the mortgage rate is currently 9.6% per year if fixed for six months and 10.5% per year if fixed for 12 months, after which it becomes floating but not lower than 11.1% per year. VietinBank has also raised its fixed rate for the first 24 months to above 12% per year, before applying a floating rate with a floor of 14% per year.

Meanwhile, Agribank lends for real estate at nearly 10% per year, but only fixes that rate for one year. Overall, mortgage rates at major banks have nearly doubled from the 6–6.5% per year seen a year earlier.

According to a survey by VARS IRE, home loan rates after the preferential period now commonly range from 12% to 14% per year, and at times have even touched 16% per year.

Previously, many borrowers had access to credit packages with preferential rates of only 5–6% per year, but these were applied for a short period. Once the loans shifted to floating-rate mechanisms, financing costs rose sharply, disrupting many investment plans, especially for those using high leverage.

According to economist Dinh The Hien, the rise in interest rates from late 2025 until now is the result of the earlier overheating in real estate credit growth. When capital flowed heavily into this sector, tighter regulation became necessary to avoid systemic risks.

He said that although the situation has not yet reached the level of strain seen in 2012 or the sharp volatility of 2022, the current interest-rate environment is still enough to put significant pressure on the property market. The impact is not limited to homebuyers but also extends to project developers during the 2026–2028 period.

From a macroeconomic perspective, maintaining high interest rates for real estate is part of a strategy to regulate capital flows and prioritize credit for production and business activities, as the economy targets double-digit growth.

Forecasts suggest that real estate lending rates will remain high in the first half of 2026 before gradually easing from the third quarter onward. However, the average rate for the full year may still hover around 12% and only decline more clearly in 2027.

Filtering the market, reducing “flipping” expectations

From a business perspective, Vu Cuong Quyet said the current interest-rate volatility is a necessary “shake-up” for the market to self-correct.

Clearly defining housing types is considered an important condition for ensuring fair competition and effective market regulation.

According to him, the recent period saw many investors using excessive financial leverage. When interest rates rose, higher funding costs forced some to sell, leading to loss-cutting or lower profit expectations.

However, it is necessary to distinguish between an actual price decline and an adjustment in expectations. In many cases, investors are merely lowering asking prices from overly high expectations to levels closer to real value, rather than taking actual losses.

This development has caused market liquidity to slow in the short term, while also accelerating a filtering process. Short-term investors that depend heavily on borrowed capital will gradually withdraw, making room for long-term investors with an asset-accumulation mindset.

Over the longer term, Mr. Quyet said housing demand remains the fundamental factor that will help the market maintain stable growth momentum. Reasonable price increases will return to around 5–7% per year, instead of the overheated 20–30% growth seen in the past.

In that context, if interest-rate cuts are implemented in a synchronized and substantive manner, they will play an important role in rebalancing the market, supporting a recovery in liquidity, and laying the groundwork for a more sustainable real estate growth cycle.