Banks’ reluctance to lend builders and buyers of low-cost housing is hindering the development of housing for poor people and workers, housing companies complain.

Currently, 263 projects for low-income people and 264 for workers in industrial parks have been approved to be built around the country at a total cost of VND132.7 trillion (US$7 billion), but the construction of many of them has been affected by the difficulty in getting loans.

The director of a HCM City-based commercial bank said banks were focused on high- and medium-priced apartment projects because they were more "efficient."

Businesses also complained about banks’ torturous procedures and the time it took them and other agencies to scrutinise loan applications and other documents.

The documents are verified first by the bank and then the departments of Construction and Finance.

The poor out of credit loop

Not only businesses but also low-income people hoping to buy houses have difficulty getting loans. There are a few social-lending agencies but poor people find it hard to get loans from them.

The HCM City Housing Development Fund, for instance, was established to support low-income people and public housing projects but it lends only to Government employees.

In the second quarter of this year, nearly 1,000 employees applied for credit and 522 of them got total loans worth VND132 billion ($6.9 million).

Other categories of low-income people can hardly get access to any other source of credit. Banks have their eyes firmly on high-income borrowers to lessen risks.

Le Van Hoa, director of the fund, urged city leaders to expand the list of beneficiaries to better fulfill the housing needs of low-income people.

Rol.vn - Source: Vietnam News