Recently, many real estate businesses have expressed concerns about regulations related to home loans.

Specifically, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that he and real estate businesses are very concerned about the provisions at Point a, Clause 11, Article 2 of Circular 41/2016/TT-NHNN (amended and supplemented by Circular 22/2023/TT-NHNN).

According to this regulation, for loans secured by real estate for individuals to buy houses, including commercial houses, banks are only allowed to lend to individuals to buy houses that have been completed and handed over, i.e. available houses.

Thus, Circular 22/2023/TT-NHNN does not allow banks to lend to individuals to buy unfinished commercial housing for handover (i.e. commercial housing formed in the future) secured (mortgaged) by that house itself. Therefore, individuals who want to borrow credit to buy commercial housing formed in the future will have to implement other security measures or secure with other assets.

Regarding this content, on January 31, the State Bank responded.

According to the State Bank, Circular 41/2016/TT-NHNN (amended and supplemented by Circular 22/2023/TT-NHNN) regulating the capital adequacy ratio of commercial banks (CBs) and foreign bank branches is not a document guiding credit granting operations of credit institutions.

Clause 10, Article 2 of Circular 41/2016/TT-NHNN stipulates: "A loan secured by real estate is a loan to an individual or legal entity to purchase real estate, carry out a real estate project and is secured by the real estate itself, the real estate project formed from the loan according to the provisions of law on secured transactions".

The State Bank affirms that Circular 22/2023/TT-NHNN does not amend or supplement this content. Organizations and individuals who need to buy a house and secure (mortgage) this future house will apply a risk coefficient of 30 - 120% depending on the guarantee ratio (LTV) calculated by the ratio of the loan balance to the value of the collateral; in case there is no information on the LTV ratio, the risk coefficient is 150%.

Loans to buy social housing do not have to meet the condition that the house has been completed for handover.

According to the State Bank, Clause 11, Article 2 of Circular 41/2016/TT-NHNN stipulates: "A home mortgage loan is a loan secured by real estate for individuals to buy a house. Fully meet the following conditions: the source of debt repayment is not the source of rental income generated from the loan; the house has been completed according to the house purchase contract.

Banks and foreign bank branches have full legal rights to handle mortgaged houses when customers cannot repay debts according to the provisions of law on secured transactions.

The house formed from this mortgage loan must be independently valued (valued by a third party or by a department independent of the credit approval department of the bank or foreign bank branch) with the principle of prudence (the price is not higher than the market price at the time of loan approval) according to the regulations of the bank or foreign bank branch".

Meanwhile, Clause 1, Article 1 of Circular 22/2023/TT-NHNN stipulates: "1. Amend and supplement Clause 11, Article 2 as follows: "11. A home mortgage loan is a loan secured by real estate for individuals to buy a house, including a loan secured by real estate for individuals to buy a house that meets the following conditions: the source of money to repay the debt is not the source of money for renting the house formed from the loan; the house has been completed for handover according to the house sale and purchase contract.

Banks and foreign bank branches have full legal rights to handle mortgaged houses when customers cannot repay debts according to the provisions of the law on secured transactions and the law on housing.

The house formed from this mortgage loan must be independently valued (valued by a third party or by a department independent of the credit approval department of the bank or foreign bank branch) with the principle of prudence (the value is not higher than the market price at the time of loan approval) according to the regulations of the bank or foreign bank branch...".

For home mortgage loans, it will include: home mortgage loans to buy houses that meet the prescribed conditions, including the condition of completion for handover, and loans to buy social housing, buy houses under the Government's support programs and projects.

The risk coefficient applied to home mortgage loans will depend on each type from 20 - 100% depending on the LTV ratio and income ratio (DSC). For loans to buy social housing, buy houses under the Government's support programs and projects, it is not necessary to meet the condition of the house being completed for handover and has a lower risk coefficient than other home mortgage loans at only 20 - 50%, in order to implement the Government's policy of encouraging social housing.

According to the State Bank, the condition of a completed house under a home purchase contract only applies to home mortgage loans (which are subject to a lower risk coefficient than other receivables secured by real estate).

In case an organization or individual has a need to build or buy a future house and mortgages the future house, it will be a case of a loan secured by real estate as prescribed in Clause 10, Article 2 of Circular 41/2016/TT-NHNN and the corresponding risk coefficient will be applied as prescribed in Clause 10, Article 9 of Circular 41/2016/TT-NHNN.

"Thus, this regulation does not restrict the rights of organizations and individuals to buy future housing, and is not contrary to current regulations (Civil Law, Housing Law, Real Estate Business Law, Investment Law 2020, Law on Credit Institutions 2024)," the State Bank stated.