Mortgage borrowers face rising anxiety as home loan rates jump back into double digits

Mortgage interest rates at many Vietnamese banks have climbed back into double-digit territory and are expected to rise further, putting pressure on prospective homebuyers and households whose preferential-rate periods have expired.

Contrary to analysts’ expectations that lending rates would stabilize after the Lunar New Year holiday as seasonal factors faded, mortgage rates at many banks have risen sharply.

A survey by The Investor shows mortgage rates at several lenders have increased by about 1.5 to 3.5 percentage points from the end of last year.

At some state-controlled banks, average listed mortgage rates are now around 10%, up 1.5 points from late 2025. At private banks, rates have climbed to 11.6-12% a year, up 1.5-3.5 points, and are still edging higher.

As a result, lending rates at state-controlled and private banks have converged, a rare development in Vietnam’s banking market.

The rise has unnerved many buyers, particularly borrowers whose preferential periods are ending. Speaking to The Investor, a woman named Hang said her family has a VND1.2 billion ($45,810) mortgage at a state-owned bank with a preferential rate of 6.8% for two years.

When the preferential period ends in late February, she expects the rate to rise to 10-12%, pushing interest payments to more than one-and-a-half times current levels and significantly increasing household expenses.

Further increases expected

Last year, mortgages were seen as a key driver of retail credit growth as low interest rates fuelled strong demand for owner-occupied and investment housing.

Brokerage Vietcombank Securities (VCBS) said outstanding real-estate-related credit, including home purchases and property business loans, reached about VND4,000 trillion ($152.7 billion) by the end of August 2025, up 19% year-on-year and accounting for nearly 24% of total credit.

Mortgage lending has taken up a larger share of total credit at state-controlled banks, while remaining more stable at private lenders. This partly reflects lower lending rates at state-controlled banks and their participation in financing social housing projects.

In 2025, many banks rolled out preferential mortgage packages offering low rates, long tenors, and high loan-to-value ratios, stimulating demand as regulatory bottlenecks eased and housing supply increased. However, the surge also pushed home prices higher, placing ownership further out of reach for many households.

For 2026, the central bank has set a system-wide credit growth target of about 15% (subject to adjustment), down from 19.01% in 2025. It has also instructed lenders to tightly control credit growth in risk-prone sectors, including real estate, to channel funds toward production and business activity and other priority growth drivers.

KB Research expects lending rates to continue rising in the first half of 2026, in line with higher deposit rates. Banks need to lift lending rates to protect net interest margins, which have declined for several quarters and are at record lows. Tighter credit quotas - especially for real estate - are also easing competition on lending rates, reinforcing the upward trend, while improving economic growth is boosting credit demand from companies and households.