BEIJING: Some Chinese banks have ramped up mortgage disbursements in some cities, a relief for cash-strapped developers keen to close the deals, but no wave of new loans has yet been triggered amid heavy pressure regulatory framework to deleverage the sector.
The authorities do not want genuine buyers to be excluded from the market or for developers to face delays in receiving payments due to slow loan disbursements in a market where health is key to the economy.
Disbursements also resumed after the People’s Bank of China (PBOC) criticized some banks last month for their “misunderstanding” of its debt control policies in the real estate sector.
Some lenders had held up issuing home loans earlier in the year, fearing they would be accused of creating debt bubbles as the state clamped down on new borrowing from developers who had gotten carried away with it. loans, bankers told Reuters.
Loan issuance also fell after new central bank requirements capping mortgage lending by banks in January.
A Beijing banker said banks that did not exceed ceilings on mortgage lending requirements had recently been granted additional quotas to lend to homebuyers, with regulators backing buyers with so-called rigid demand, referring to when bought or rented by people who are recently married or who were looking for low-cost housing.
New housing prices barely rose in October, weighed down by weak demand in major cities, a private survey revealed on Monday.
A Shanghai banker said his branch accelerated the distribution of mortgages in the third quarter. However, his bank was reminded by the authorities that the regulatory position remained very strict on illegal loans to the sector.
“The mortgage quota has not increased for us, but mortgage issuance is accelerating,” said another banker in Shanghai.
The slowdown in mortgage approval has partly contributed to the financial stress facing developers, including the struggling China Evergrande group.
Amid the downward cash flow, some developers failed to complete their projects, prompting many complaints from homebuyers and chilling out new purchases.
“The wait time for mortgage loans is shorter now, around three to four months compared to six months ago,” said a real estate agent named Liu in Shanghai.
Loan approval was also faster due to fewer buyers in the queue, said Zhang Dawei, chief analyst at real estate agency Centaline.
In October, banks granted some 150 billion yuan to 200 billion yuan ($ 31 billion) more home loans than in September, according to a report released Thursday by public media Cailianshe, citing unidentified sources.
Analysts have also noted an acceleration in the issuance of Residential Mortgage Backed Securities (RMBS) by banks, implying that banks are offered an alternative route of raising capital as they use funds to lend to banks. home buyers.
“Local RMBS issuance reached 77 billion yuan in September,” Huatai Securities said.
“The show resumed after a two-month hiatus and increased by a significant amount, which we consider to be a (regulatory) guiding gesture.”
At the end of September, outstanding mortgages reached 37.3.7 trillion yuan ($ 5.84 billion), according to central bank data.