A property project umder construction in downtown Hanoi (Photo: VNA) In an earlier development, for the first time in the last two years, thecentral bank decided to cut policy interest rates by 1 percentage point, bringingthe discount rate from 4.5% to 3.5%, overnight rate for inter-bank from 7% to 6%annually.
According to the central bank, average inter-bank overnight rates have fallenby as much as 0.8%, to 2.7% on March 20, marking the first dip under 3% sincethe end of August last year.
Economist Can Van Luc, a member of the national finance and monetary council,said a dip in interest rates would likely result in much-needed improvements inthe property market.
Luc said it might translate into lower prices as investors gained access tolower-interest loans while giving them a financial boost to finish ongoingprojects or start new projects.
In addition, a lower rate might give buyers more confidence to make purchasesand improve market attitude in general as many potential buyers were sitting onthe fence waiting for prices to drop further.
"Since the beginning of the year, interest rates have dropped by 1-2percentage points with commercial banks introducing additional credit packages.It can be expected that rates may further decline in the near future," hesaid.
However, Luc remained cautiously optimistic about the effect of lower rates onthe market, saying not all businesses might benefit the same. Establisheddevelopers with many previously successful projects and competent financialmanagement would likely receive better offers from banks and buyers.
In light of the corporate bond market, property developers were able to issue 20trillion VND worth in bonds since March 5 when numerous policy changes tookplace to stabilise the market, a marked improvement over 2022 after a number ofviolations and high-profile arrests put the market to a halt.
According to a report by VNDirect, corporate bonds from property developers forthe entire year of 2022 were recorded at 62 trillion VND, a 79% declinecompared to the previous year.
Dinh Minh Tuan, director of batdongsan.com.vn Southernoffice, said, among other measures, extending bond terms allowed developersmore time to address issues and secure financial resources.
"With the return of confidence in the market, developers may issue newbonds to help finance their existing ones," he added.
Bondholders who want to cash out after maturity still have that option whilethose who wish to continue holding onto them can avoid sell-out and losses ofassets, according to the director.
In a recent decree, the central government has ordered local authorities towork around the clock to review and resolve ongoing legal issues with propertyprojects under their jurisdictions in an attempt to support developers andprotect buyers' rights and interests./.
VNA
