Will the cheap money come back?

The highest 6-month term deposit rate is only about 8.8%/year, recorded at HDBank 

>> How will policy rates impact Vietnam’ real estate market?

Low interest rates

The highest 6-month term deposit rate now available on the market, after two reductions in the SBV's policy rate in March 2023, is only about 8.8%/year, recorded at HDBank (through savings accounts)), followed by Nam A Bank and GP Bank with a deposit rate of 8.6%/year. Other banks, meanwhile, have decreased deposit rates for maturities longer than six months.

The SBV's April 3 reduction of short-term deposit rates of less than six months caused a sharp decrease in short-term deposit rates. This fact also showed that, despite a sharp fall in demand for short-term deposits, commercial banks have a lot of short-term liquidity. 

The SBV has also recently kept up its large-scale acquisition of foreign currency from commercial banks. The national FX reserve is now close to 94 billion USD after adding this sum to FX purchases made in the first two months of the year, which totaled roughly 4 billion USD. This indicates that commercial banks will have more ample liquidity.

>> Central bank forecast to keep policy interest rate unchanged in Q1 2023

More monetary easing

There is a surplus of liquidity, and deposit rates have decreased precipitously to a new level that is comparable to the level prior to the epidemic. But according to analysts, long-term deposit rates are still relatively high (about 8.5-8.7% annually).

Borrowers will receive a preferential rate of 8.2% at Vietcombank, Agribank, BIDV, and VietinBank for a package of VND 120,000 billion, while project owners would receive a rate of 8.7%/year. These rates are 1.5–2%/year less expensive than market rates. Because of this, the market's lowest rates are similarly 10.2–10.7%/year. Even real estate investors borrow money at interest rates starting at around 14% annually. Therefore, businesses and borrowers anticipate additional declines in interest rates, particularly for medium- and long-term loans, in the foreseeable future.

According to Mr. Hoang Huy, CFA of MSVN Securities Company, the SBV may reduce policy rates by an additional 50 basis points in 2Q23.

In a similar vein, the Research and Analysis Division at UOB Vietnam is leaning toward the idea that the SBV would lower the policy rates by a total of 100 basis points in 2Q23. It suggests that before the end of 2Q23, the refinancing interest rate will probably decrease by an additional 50 points.