Housing Microfinance in Vietnam

This Netherlands Development Finance Company (FMO) research paper explores the market for microfinance, housing finance (HF) and housing microfinance (HMF) in Vietnam. It evaluates supply and demand, the main players, low-income HMF programs, HF problems, and patterns and trends of HMF in Vietnam.State-owned commercial banks, private sector joint-stock commercial banks (JSCBs) and international banks are the main players in the Vietnamese HMF sector. Key findings include:

• HMF products are directed to the poorest households, mainly to women for upgrading purposes;
• Loan sizes for housing/upgrading vary between US$ 160 to US$ 940, and corresponding loan terms lie between 50-156 weeks;
• Interest rates are lower for larger loans;
• Loan officers issue loans in cash and repayment is weekly or monthly;
• Joint liability group lending mechanisms are not used, and HF products come with traditional mortgages;
• Market has high potential, and younger Vietnamese with higher-income levels will demand more HMF.

Finally, the study recommends the possible paths the FMO can take to diversify operations in Vietnam and expand its funding to HMF providers.