Central Bank Worried China's Mortgage Slaves Will Walk Away; Bank Exec Says Houses Overpriced; Banks Unwilling to Lose Money; 1.23 Trillion of Household Deposits Leaves Banks in April

There's a new take on yesterday's central bank directive to lend to home buyers. An overlooked part of central bank deptuy governor Liu Shiyu's statement was him telling the banks not to solely pursue profits; i.e. you should take losses to support the market. This is interpreted by one writer as the central bank seeking to avoid a situation where Chinese home owners "walk away" from their mortgages, something that has already happened in Wenzhou.

The banks have said homes are currently overvalued and they are taking several steps to reduce lending, such as increasing the time to approval. According to Centaline, in Beijing and some other cities, loan approval for existing home mortgages has increased from one month last year to three months this year. That is affecting turnover and contributing to the inventory buildup.

Savers also continue to move money out of deposit accounts and into higher yielding WMPs or online money markets, driving up bank's cost of capital and therefore interest rates. Many banks can earn more money by lending to other banks rather than to home buyers.

防止房奴弃房,央行力挺楼市 (To Prevent Homeowners From Walking Away, Central Bank Supports Housing Market)
Banks are businesses, in order to make money. But Liu's speech, the moment seems to have reached a special moment, has asked banks "do not over-pursue business sustainable development." He says:

To understand the pressure to survive the bottom of society officers have a social responsibility, not allow banks to lose money, be financially sustainable development (preservation, profit) like, do not over-pursue sustainable business, each line execution rates almost on the line.

Minutes circulated on the Internet in a word, is "abandoned house." As can be seen, in particular, the central bank fears of house slaves "abandoned house" phenomenon, this situation has occurred since last year in Wenzhou.

It was reported in August 2013: The house is not enough to sell to repay bank loans, this "upside down" phenomenon in Wenzhou intensified. Wenzhou credit risk generate social housing slump, some individuals "abandoned house" or "foot" situation ......

房贷为何如此紧 银行高管称房子根本不值这么多钱 (Why is Mortgage Lending Tight? Bank Executive Says Houses Aren't Worth This Much)
The banks have become increasingly stringent in reviewing the loan qualifications. Fuli town a landlord told 21st Century Business Herald reporter, due to the presence of some of his past cases overdue credit card payments, direct bank rejected his loan application. He is currently facing only cobble together the remaining housing fund or transferred to other buyers embarrassed.

Three Rivers Branch of Bank of China, the mortgage department official popular argument seems to explain the mentality of the current bank. "Prices are too high, we believe that the current house is not worth so much money."

房贷“香饽饽”遭银行抛弃 称不愿干赔本赚吆喝买卖 (Demand For Mortgages Meets Banks Unwilling to Lose Money)
"Application for several months, did not grant preferential down, only the benchmark interest rate." Mr. Smith last year to buy a house in Beijing has something for mortgage troubles.

Search online financial platform "melting 360" previously released in March mortgage analysis report shows that in the sample selected 35 cities, 25 cities have stopped lending phenomenon, mainly in small and medium commercial banks based.

In Beijing stopped lending phenomenon is not so serious, but the discount is a difficult task. According to lenders Wei Jia Anjie information provided, currently in Beijing, ICBC, Agricultural Bank of China, Bank of China, Construction Bank, postal savings, China Merchants Bank, Shanghai Pudong Development, Standard Chartered first mortgage interest rates are all benchmarks, while Bank, China Everbright as the benchmark interest rate of 5% just over 1 million Citigroup loan can enjoy 9.5% discount, while CITIC [ Introduction News ] Bank agency cooperation with the 10% discount, if an individual to apply for a loan or CITIC Bank base rate.

In addition, some second-hand housing intermediary reflected significantly lengthen the time lenders are now also affecting customer transactions. Centaline research director Zhang Dawei said that the current Beijing and other cities, second-hand housing transactions in loans on average about three months, compared to previous years stretched more than a month, resulting in many trading halt.

......The rise in the Chinese real estate market at the same time, the bank's residential mortgage loans also experienced a round of expansion, the mortgage business once accounted for more than 90% of the loan business, in a competitive year, banks competing for customers discounts.

Once the meat and potatoes, and now why the bank was abandoned?

"After the interest rate market, operating pressure." Said a joint-stock banks. Beginning last year, the bank's capital under tight constraints, liquidity management more difficult cases, purchase mortgage loans attractive to commercial banks decreased. Under certain circumstances the total size of credit, banks will often yield assets put to better use of controllable risk assets, but low interest rates for mortgage loans, not the best variety of businesses.

Guotai Junan Securities analyst Qiu Guanhua said that under the interest rate market background bank funding costs rise, mortgage banking business very profitable, although nominally supported by many commercial banks mortgage has actually shrink dramatically or even suspended. Dawei said that the main reason for the present situation is difficult to increase the mortgage bank credit costs, April ¥1.23 trillion moved out of bank deposits, the average cost of the bank to raise interest rates, is unlikely to result in preferential buyers.

互联网金融持续冲击 4月1.23万亿居民存款搬离银行 (Internet Banking Continues to Attack)
April RMB deposits decreased 654.6 billion yuan, of which household deposits declined by 1.23 trillion yuan, the non-financial corporate deposits increased by 171.5 billion yuan, government fiscal deposits increased by 562.1 billion yuan.

It is worth noting the financial impact of the Internet, in January this year there was the first significant decrease in RMB deposits 940.2 billion yuan. And in addition to seasonal factors, a major cause of January move is a significant deposit "Yu E Bao-like products" continues to shock. Although the New Year a lot of cash back, and the impact of the bank deposit ratio at end of February and March renminbi deposits has gone up, but by the ongoing financial impact of the Internet, and in April the bank still saw deposits leave.

Qilu Securities macroeconomic researcher Yang Chao said in April renminbi deposits, deposits of households and non-financial corporate deposits were sharply reduced, said moving the role of financial innovation on deposits continues.

School of Finance, Renmin University of China Zhao Xijun, vice president of the Beijing Daily, told reporters that the Yu E Bao-like products continue to divert a portion of renminbi deposits, another due in April of production and business activities has been restored, it will have some negative impact on the size of the deposit . In addition, there is no end of the quarter due April bank loan ratio assessment, banks are likely to be part of the deposit into the bank in March wealth , leading to sharp decline in April renminbi deposits.

Banking and financial markets analyst Dongguan Chen also said that the RMB deposits declined more in line with expectations, reflecting the phased reduction in the red after the financial disintermediation kept under the interest rate market and the background of the quarter.

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