Interest rates may have peaked as liquidity pressures persist.

Credit growth in the first quarter of 2026 reached 2.4% year-on-year, according to the General Statistics Office, still outperforming year-end 2025 deposits of credit institutions, which stood at +0.8% year-on-year.

While deposit rates have moved higher—short-term rates up 18 basis points versus 2025 and long-term rates up 46 basis points—liquidity has not shown a clear improvement. Analysts say this suggests the constraint on credit growth is not driven solely by interest rates, but by a combination of factors affecting money circulation and bank funding.

Real estate remains a key bottleneck

Mirae Asset Securities’ analysis points first to liquidity that has not yet been released. Real estate loan growth has risen more strongly than the overall level since 2023 following the corporate bond market shock toward the end of 2025. However, selling prices remain anchored at high levels, most new products are in the mid-to-high-end segment, and income prospects are unstable, keeping trading activity relatively subdued.

Separately, the Ministry of Construction reported that trading activity declined nearly 24% quarter-on-quarter versus Q4 2025, or 14% year-on-year. The data indicate that cash remains tied up in real estate projects.

The State Bank of Vietnam’s early-year move to curb credit growth focused on real estate is also seen as reflecting policymakers’ intent to address this bottleneck—requiring real estate developers to sell products before developing new projects.

Reforms affecting money circulation take time

Second, the analysis highlights that reforms can significantly affect money circulation and require time for the economy to adapt. Examples cited include legalizing investment in digital assets, restricting speculation in foreign currencies and gold, enacting new tax policies, and standardizing the operation of households and individuals.

This is reflected in overall growth remaining high, while retail goods (consumption) stays in single digits, with 2025 retail goods growth at +8.52% year-on-year.

Inflation risks and external pressures

Domestically, high credit growth over the past 2–3 years, together with price pressures from materials (linked to public investment and construction) and energy (driven by geopolitical volatility), means inflation risks in 2026 must be managed carefully. The analysis notes that monetary policy cannot be too loose even though double-digit growth remains a central objective.

Externally, the resurgence of US dollar strength—likely delaying expectations for US rate cuts in 2026—and the possibility of a reversal in the Federal Reserve’s rate path, combined with unresolved foreign exchange reserves, could make sustaining low rates costly. This may also increase risks of policy misalignment in the future.

Liquidity pressure and interbank rate signals

Liquidity tensions are described as a real constraint. Liquidity indicators in the banking system and movements in interbank rates suggest pressure is not small. Commercial banks are required to maintain liquidity metrics in line with legal requirements while also meeting demand for new lending.

Interbank-rate movements also indicate that, in a macro environment of instability (which may be short-term), deposit pricing is not determined by yields alone. Safety considerations play a crucial role. As a result, when large banks raise rates, mid-sized and smaller banks may need to raise rates by a larger margin to avoid deposit outflows. They also must weigh yield margins—already low—against borrowers’ repayment capacity, which is generally weaker for smaller banks’ clients than for large banks’ borrowers.

Deposit and loan pricing dynamics

Deposit rates have risen but remain within banks’ planned ranges of 30–50 basis points, while loan rates have increased more quickly by 50–130 basis points. This pattern suggests credit demand remains higher.

The analysis warns that if the market is left to adjust on its own, the risk of a self-reinforcing cycle could grow, with higher rates driven by competition and risk premia.

Policy stance: stabilization rather than further easing

It says the recent broad agreement among banks to cut rates—under instructions from the State Bank—should be understood as stabilizing the overall rate level rather than easing further. The State Bank is described as maintaining accommodative monetary policy at a low level and managing liquidity stage by stage. The magnitude and speed of recent rate increases were forecast, but were somewhat faster; without State Bank intervention, this could have increased risks.

Limiting the pace of rate hikes alone is not expected to immediately correct imbalances in credit and deposit growth, so restraining the “rate race” is viewed as appropriate. The quarterly credit cap also reflects a more cautious approach than earlier phases, depending on domestic and international developments.

Outlook for rates and near-term liquidity

Based on the current situation, rates are not expected to have peaked yet, but they are considered close, with an estimated additional 20–30 basis points. The balance of factors includes inflation, exchange rates, and money supply.

Liquidity has declined sharply, and pricing is not yet low enough to justify broader relaxation. As a result, funds may remain cautious in the near term.