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Project Number: 35497-013
Project Name: Housing Finance Project
Report Date:
Lesson
There are perceptions among some government agencies in Viet Nam that the interest rate should be much lower than market rates and be subsidized. Rather than focusing solely on the financing side, the complex issue of housing for the urban poor also needs to be looked at from the viewpoint of supply side constraints and the willingness of lenders to consider this an appropriate business line. Targeted subsidies that are separate from financing also need to be considered. Again, access to credit is more important than is providing interest rate subsidies.

Project Number: 35497-013
Project Name: Housing Finance Project
Report Date:
Lesson
Careful poverty analysis, a proper demand and supply analysis for housing, better selection criteria, as well as more pro-poor loan procedures and flexibility in the loan size, term, and use would have enhanced the inclusiveness and beneficial impacts of the project. Given the targeted low-income segment and limited institutional capacity, such projects should not be overly complex in design and difficult to implement. Having a variable interest rate on the loan did not help. Fixed interest rates are more appropriate and preferred by low-income and poor borrowers.

Project Number: 35497-013
Project Name: Housing Finance Project
Report Date: