HO CHI MINH CITY • Ms Le Trang, an office worker, and her husband did not think they could afford a three-bedroom apartment in a high-rise building in the suburbs of Ho Chi Minh City.
The availability of a mortgage to finance the purchase of a one billion dong (S$60,000) condominium changed their course. The newly-weds secured a 15-year mortgage for the 78 sq m unit, joining tens of thousands of first-time buyers in Vietnam who are fuelling an explosion in the US$40 billion (S$56 billion) home-loan industry.
Loans to home buyers surged 22 per cent this year through August, marking a shift in a country where it is not uncommon for buyers to plonk down sacks of money in all-cash transactions.
Real estate loans, which account for about 8 per cent of total bank lending, are contributing to a property rebound that has seen home sales almost double this year. The change is being driven by demographics - 60 per cent of Vietnamese are under the age of 35 - and rising migration into cities.
"The mortgage market in Vietnam is beginning to take off now," said Mr Nirukt Sapru, chief executive officer at Standard Chartered Bank Vietnam.
"As the younger generation gets richer, gets better-quality jobs - which is clearly happening in Vietnam - their ability to move out of grandmother's house increases."
The bank estimated the country's mortgage market growing by about US$3 billion a year. It declined to give data on its mortgage business.
Just six years ago, when Indochina Land sold condominiums in a Hanoi high-rise, buyers hauled sacks filled with dong, accompanied by policemen, to finalise their home purchases, said Mr Tony Diep, managing director of investment firm Indochina Capital.
Indochina Land is the real estate division of Indochina Capital.
"You'd have stacks and stacks of cash sitting on the conference room table and three money-counting machines going at the same time," he said.
"Mortgages are much more popular now and easy to get."
That is because property developers are building affordable homes with young couples in mind and teaming up with banks to offer financing.
Nam Long Investment, Vietnam's top builder of affordable homes, expects to sell 80 per cent of 2,450 units through mortgages this year, compared with 30 per cent just a few years ago, according to the company.
Nam Long's banking partner, Ho Chi Minh City Housing Development Commercial Joint-Stock Bank, sends its loan officers to the developer's open-house events.
Mortgages at HDBank, as it is commonly known, now account for nearly 40 per cent of its business, three times more than in 2012, said Mr Tran Quoc Anh, director of the retail banking division.
Its mortgage book will double within the next three years to five trillion dong, he said.
The typical mortgage candidates at HDBank are young couples in their 30s with annual incomes of US$12,000 to US$15,000.
"The mortgage market will only grow as the numbers of middle and upper-middle young professionals grow," said Mr Nguyen Le Quoc Anh, chief strategy officer at Vietnam Technological and Commercial Joint-Stock Bank.