Date
18 October 2017
Construction Continues At Vanke's Fun City Residential Property

The Big Picture: MORTGAGE TIGHTENING

Most urban commercial banks in China have withdrawn the 15 percent lending rate discount for first-home buyers in top-tier cities since early this year as the margin on the mortgage business has been too thin, according to a report published on the website of China Securities Journal on Monday. 

Banks would normally be more willing to offer mortgage loans to home buyers at the beginning of each year as they have new quotas for the business, but this year the situation has been different, the report said. Some banks were quoted as saying that they have a tighter quota for the mortgage segment this year, so they will not grant the 15 percent discount to borrowers. 

Some lenders even said that they have halted mortgage loans since the fourth quarter of last year and that they are yet to resume the service.

The tightened mortgage market may in part be due to a change of strategy at some small and medium-sized banks, which may be seeking to keep more cash in hand to counteract any possible credit crunch, observers say. When liquidity in the money market is tight, they can boost their interest income by granting more high-yield credit to risky firms. 

Such trend will hurt the property market if it spreads to the lower-tier cities, observers say. Property developers may have to cut prices if demand from first-home buyers weakens, especially under an oversupply situation.

Banks in Shanghai removed a 15 percent lending rate discount for first-home buyers even as the lending quota rose at the start of the year, Shanghai Securities News reported on Jan. 16, citing banking sources. The Shanghai branches of the big-four state-owned banks as well as joint-stock commercial banks are all lending to first-home buyers at the benchmark rate, the paper said. The move came as banks grappled with tighter liquidity and the failure of less profitable home loans to cover the costs of high-yield wealth management products, it said.

Financial news portal cailianpress.com reported the same day that the People’s Bank of China wrote to Beijing-based commercial banks saying that from Jan. 13 homebuyers in Beijing will not get the 15 percent discount on benchmark interest rates. However, the central bank denied the report the following day.

Spring Festival road trips top 1.5 bln

Road transport passenger trips hit 1.52 billion during the Spring Festival peak travel season, state portal gov.cn reported Monday, citing Ministry of Transport data. The figure from Jan. 26 to Feb. 4 is up 6.4 percent from the corresponding period last year. More than three million journeys were made in 10 major cities monitored by the ministry, up 18.24 percent year on year. Tianjin recorded the highest increase at 153.15 percent, the report said.

–Contact HKEJ at digest@ejinsight.com

JP/AC/RC

 

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