Residences are seen at the social housing project Dong Hung II in District 12, Ho Chi Minh City May 12, 2013.

The preferential loans will have a maturity of ten years, stated Circular No.11, which is issued as guidance for the government’s Resolution No.2 to remove difficulties against production and business, support the real-estate market, and deal with non-performing loans.

The VND30 trillion, or US$1.44 billion, package will be disbursed via five banks selected by the central banks within 36 months of the effective date.

These include Agribank, BIDV, Vietinbank, Vietcombank, and the Mekong Housing Bank.

“Eligible borrowers for the package are those who want to buy or hire social houses with an area of under 70 square meters that costs less than VND15 million a square meter,” said Nguyen Viet Manh, head of the SBV’s credit department.

The loans are applicable for those with a house purchase contract dated from January 7, he added.

Manh said 30 percent of the package will be earmarked to help businesses to convert the function of their commercial projects into social housing.

“The policy is not intended to save the trouble-ridden realty market but to realize the house buying dream of those really in need,” Manh asserted.

Deputy Minister of Construction Nguyen Tran Nam said the aid will not only assist house-buyers but also warm up the frozen property market.

“If the loans are appropriately disbursed to the right borrowers, this will create a stimulus for the social housing sector and hopefully for the real-estate market as well,” he said.

Only for low-income earners

Also on Wednesday, the Ministry of Construction released Circular No.7 specifying the eligible borrowers for the loans.

Specifically, low-income earners who are public officials and civil servants, armed force officers and soldiers, and workers at industrial parks, complexes, production and service sites are eligible to access the loans to buy social houses, according to Deputy Minister Nam.

Borrowers only need to present their buying or leasing contracts of the social houses and the debt repayment solutions in order to access the loans, he said.

“Only those with monthly income under VND9 million, or those that do not have to pay personal income tax, are able to sign the social house buying contract,” he noted.

The eligible borrowers also have to settle 20 percent of the total value of the house in advance in order to receive the loans.

Meanwhile, by December every year, the central bank will define and publish preferential lending interest rates for the loans for the following year, which are required to be equal to half of the average lending interest rate in the market but less than 6 percent per year.