Expanded credit fuels potential for interest rate relaxation
Vietnam's Interest Rates Outlook: Stable with Slight Reductions Ahead
In a move that could potentially ease exchange rate pressure and lower mortgage rates in Vietnam, the Federal Reserve is expected to lower rates in September and December. This announcement comes as several other factors converge to shape Vietnam's interest rate landscape.
According to MBS Securities, input interest rates could fall slightly, reaching around 4.7 per cent by the end of the year. This prediction is based on the convergence of stable input costs, easing exchange rate pressures, a broad consensus across the banking system, and decisive policy guidance from both the government and the State Bank of Vietnam (SBV).
The SBV has instructed banks to adopt synchronised measures to stabilise and reduce deposit rates. As a result, deposit rates are expected to hover around current levels through the end of 2025, with slight declines possible due to flexible policy management. The average deposit rate in Vietnam has been steady at around 4.8 per cent as of August 31, 2025.
State-owned lenders offer lower deposit rates compared to private banks, with ranges for various terms specified. However, Vietnam's deposit market is showing renewed activity as private banks lift interest rates to attract funds, driven by robust credit growth and increasing pressure to balance funding.
The average lending rate in Vietnam has dropped to 6.38 per cent as of August 31, 2025. The SBV has directed credit institutions to reduce lending rates and channel credit into priority sectors such as science and technology, innovation, digital economy, green, and circular economies.
Rapid money supply growth in Vietnam could potentially spur medium- to long-term inflation. To proactively manage this risk, the Prime Minister has issued Directive No.159/CĐ-TTg, instructing the SBV to manage monetary policy flexibly.
Analysts believe that the SBV's new regulatory tools, combined with expectations of a Fed rate cut in September, will ease pressure on the interbank market. Market analysts predict that lower borrowing costs could stimulate lending and investment activity in Vietnam. The United Overseas Bank Limited projects that the SBV could reduce policy rates by about 0.5 percentage points if the Fed cuts USD rates in September and the downtrend becomes more apparent by year-end.
Credit risks loom as banks battle rate-cut pressures. The SBV has ordered all credit institutions to adopt measures to stabilise and reduce deposit rates. Nguyen Quoc Hung, vice chairman of Vietnam Banks Association, encourages member banks to maintain stable deposit rates and lower lending rates.
As of the end of August 2025, outstanding credit in Vietnam reached $685.6 billion, up 11.08 per cent from the end of 2024. For the whole of 2025, credit growth could reach 20.19 per cent, the highest in many years.
Looking ahead to the end of 2025, the interest rate outlook appears stable, with a high likelihood of slight reductions if the Fed adopts a looser policy stance and exchange rate pressures remain under control. These factors provide a solid foundation for expectations that both deposit and lending rates will remain low.
However, it's important to note that as of now, there are no search results providing information about which banks in Vietnam offered the lowest savings interest rates in 2025. As the situation evolves, it's advisable to keep a close eye on updates from the SBV and the banking sector for the most accurate and up-to-date information.
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