Nam, a resident of Phuoc Long Ward in Ho Chi Minh City, owns an apartment in Thao Dien ward, which she placed a deposit on during the 2025 Lunar New Year. Unable to fully balance her payment sources, she opted for a bank overdraft loan with an initial preferential rate of 6 per cent per year.
The loan carries a floating mechanism, reviewed every three months, with the most recent adjustment in March. Based on her inquiries, the interest rate could rise by around 3 percentage points to 9 per cent per year.
The greater concern lies in the risk of further increases in upcoming review cycles. If mortgage rates climb to 12 per cent per year, or even 14 per cent per year as some banks are currently applying, her monthly repayment obligations would rise significantly, directly affecting household cash flow and financial planning.
In response, Nam is considering transferring the apartment to reduce financial leverage. However, she remains uncertain about market absorption capacity in a high interest rate environment, as buyers may be more cautious about borrowing, affecting liquidity and exit timelines.
The concern is not isolated. Kien, from Binh Trung Ward, has paused his home purchase plan due to rising rates. If he borrows about VND 1.2 billion (approximately USD 47,000), the floating rate could reach 14.5 per cent per year, or even 16 per cent per year as seen five to six years ago.
Under that scenario, his family could face monthly payments of around VND 22 million (approximately USD 863) for principal and interest, excluding living expenses and childcare costs, prompting him to step back.
Home loan interest rates have increased at many banks (Photo: Manh Quan).
Throughout the 2025 Lunar New Year holiday, deposit and lending rates continued to climb sharply. Many banks that previously offered two year fixed mortgage rates at around 6.5 per cent per year have gradually raised them to a common range of 13 to 14 per cent per year. Some lenders have also shortened the fixed rate period to 12 to 18 months instead of 24 months.
Vo Hong Thang, deputy chief executive officer of DKRA Group, said the pace of rate adjustments in recent months has been rapid. At a rate of 14 per cent per year, a VND 1 billion (approximately USD 39,200) loan now creates similar interest pressure to a VND 2 billion loan when rates were 6.5 per cent per year previously. Although the principal remains unchanged, the effective financial burden has nearly doubled, increasing stress on homebuyers.
In its latest directive, the Prime Minister asked the State Bank of Vietnam to strictly control speculative real estate credit, prioritise genuine housing demand, and implement flexible and effective monetary policy to stabilise the macroeconomy and control inflation, while closely supervising credit institutions’ exposure to the property sector.
Mai Thanh Thao, deputy head of banking and corporate services at Savills Vietnam, advised homebuyers to carefully manage borrowing ratios and avoid letting repayment obligations exceed financial capacity when rates fluctuate. She cautioned against relying solely on promotional rates for the first 6 to 24 months and urged buyers to calculate based on post incentive floating rates.
Customers should prioritise assets with real usage value, clear legal status and immediate exploitation potential to reduce financial pressure and improve liquidity. In a high rate environment, legal risks or project delays could significantly increase opportunity costs. Maintaining a contingency fund sufficient to cover 6 to 12 months of repayments is also considered essential amid potential income volatility.
In an environment where rates could reach 15 to 18 per cent per year, she recommended focusing on assets meeting three criteria: genuine demand, clear legal status and cash flow generation.
Segments such as mid range apartments for owner occupation, completed homes in established residential areas, industrial and logistics real estate, and income generating assets such as mid sized offices, rental housing, serviced apartments and shophouses with tenants are viewed as more defensive.
She emphasised that profit expectations need to be adjusted more realistically, requiring genuine capital, a long term outlook and financial discipline.
