On December 29, 2023, the Governor of the State Bank issued Circular 22/2023/TT-NHNN amending and supplementing a number of articles of Circular 41/2016/TT-NHNN regulating the capital adequacy ratio for with banks and foreign bank branches. According to Circular 22/2023/TT-NHNN, the State Bank has amended the risk coefficient regulations for residential mortgage loans, dividing the risk coefficient into 2 separate types.
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Previously, in Circular 41/2016/TT-NHNN, the State Bank only generally stipulated the risk coefficient applicable to residential mortgage loans based on Guarantee Rate (LTV) and Income Rate (DSC) applies to all subjects. However, in Circular 22/2023/TT-NHNN recently issued, the risk coefficient applied to residential mortgage loans has been classified into 2 separate types: Risk coefficient applied to loans to buy social housing, buy housing under Government support programs and projects; Risk coefficient applies to other loans.
Specifically, according to Circular 22/2023/TT-NHNN, the risk coefficient applied to residential mortgage loans according to Security Rate (LTV) and Income Rate (DSC) is as follows:
(1) Risk coefficient applies to loans to buy social housing and housing under Government support programs and projects.
- For residential mortgage loans with a DSC of 35% or less:
+ LTV below 40%: 20%
+ LTV from 40% or more to less than 60%: 25%
+ LTV from 60% or more to less than 80%: 30%
+ LTV from 80% or more to less than 90%: 35%
+ LTV from 90% or more to less than 100%: 40%
+ LTV from 100% or more: 45%
- For residential mortgage loans with DSC over 35%:
+ LTV below 40%: 25%
+ LTV from 40% or more to less than 60%: 30%
+ LTV from 60% or more to less than 80%: 35%
+ LTV from 80% or more to less than 90%: 40%
+ LTV from 90% or more to less than 100%: 45%
+ LTV from 100% or more: 50%
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(2) Risk coefficient applied to other loans.
- For residential mortgage loans with a DSC of 35% or less:
+ LTV below 40%: 25%
+ LTV from 40% or more to less than 60%: 30%
+ LTV from 60% or more to less than 80%: 40%
+ LTV from 80% or more to less than 90%: 50%
+ LTV from 90% or more to less than 100%: 60%
+ LTV from 100% or more: 80%
- For residential mortgage loans with DSC over 35%:
+ LTV below 40%: 30%
+ LTV from 40% or more to less than 60%: 40%
+ LTV from 60% or more to less than 80%: 50%
+ LTV from 80% or more to less than 90%: 70%
+ LTV from 90% or more to less than 100%: 80%
+ LTV from 100% or more: 100%
Thus, from July 1, 2024, risk coefficient regulations for residential mortgage loans will officially be applied.
Circular 22/2023/TT-NHNN takes effect from July 1, 2024.
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