2014-10-09

State Banks Begin Show of Implementing Mortgage Policy, Results May Vary

State banks are leading the way in implementing new mortgage rules, but even they may be unwilling to fully implement the policy since the fully discounted mortgage rate falls below the deposit rate. Add in costs and concerns about the real estate market, and it's no surprise that the general tone here is that it will be very difficult to obtain discounted rates.

Chinese banks relax mortgage rules
Industrial & Commercial Bank of China Ltd. , the biggest Chinese lender by assets, and China Construction Bank Corp. , the second-largest, will both allow home owners with no mortgage debt to purchase a second home at the more attractive terms typically offered to first-time home buyers.

They also pledged to offer first-time home buyers discounts that would lower their mortgage rates by as much as nearly two percentage points from the current benchmark of 6.55 per cent.

ICBC, which disclosed the new terms to its branches in a notice reviewed by The Wall Street Journal, also said it would offer owners of two or more homes a lower down-payment requirement, of as little as 30 per cent of the home price, compared with the usual 60 per cent, if they cleared their mortgage balances.

......"The move has boosted the confidence of homebuyers and property developers as it shows that Beijing wants to save the market, but we’re still waiting for the lenders to change their lending policies,” said Zhang Shihua, a property agent selling villas in the northeastern Chinese city of Shenyang.

Experts said it wasn’t likely that banks would offer the full discounted mortgage rate to many customers. The full discount would result in a mortgage rate of about 4.6 per cent, compared with the benchmark five-year bank deposit rate of 4.75 per cent. That would mean banks were essentially lending at a loss.
That quote makes me think of Sally Fields' Oscar speech, "The first time I didn't feel it, but this time I feel it—and I can't deny the fact that you like me, right now, you like me!"

Here's the Chinese coverage from iFeng, headline is "Many State Owned Banks Begin Implementing New Mortgage Policy"
内地多家国有大行开始执行房贷新政

industry, agriculture, construction and many other Chinese large state-owned commercial banks has learned, according to the PBOC, CBRC adjusted mortgage policy, a number of big firms have the introduction of specific measures, and has begun to implement policies in accordance with the new mortgage.

ICBC [ -0.28% funding research report ] that the policy on housing loans, the People's Bank, China Banking Regulatory Commission in "further improve the housing financial services work, "already clear requirements, ICBC will conscientiously implement. Currently, according to the new mortgage policy requirements, for loans to buy the first set of family housing, minimum loan down payment is 30% the proportion of money lending rate limit is 0.7 times the benchmark lending rate.

Construction Bank [0.00% funding research report ] said, no individual housing loans for recording or home loans have been settled, under the name of non-family housing, apply for a loan to purchase a home, do the first suite loan policies. To own a home and have settled accordingly family home loans, to improve their living conditions to re-apply for loans to buy homes, may refer to the first suite loan policies. Specific operations in the hands of local branches.

Agricultural Bank [0.00% funding research report ] also clearly support the focus on priority to meet for the first time to buy ordinary household commercial loan demand, based on the active support of improving the type of housing credit demand, a reasonable demand for the purchase, will strive to provide better financial services. Improve efficiency, and gradually promote individual housing loans automatic approval. Scientific and reasonable pricing, the loan interest rate at a reasonable level.

In addition, a number of big firms have said, will increase the construction of affordable housing projects support. Adhere to risk control, sustainable business principles, and actively support eligible credit conditions in shantytowns and affordable housing construction projects.

CCB noted, will continue to support the financing needs of the real estate development enterprises reasonable, merit-based support to meet the first set of high-quality customers and improve the type of demand-driven ordinary housing project funding requirements.

ABC also said that the new corporate real estate loans, will focus on supporting the construction, continued construction of ordinary commercial housing projects, and actively support the transformation of shanty areas like affordable housing construction projects. On the launch area, real estate market conditions continue to increase the region's efforts to put a good loan.

CCB reads as follows:

To better support consumer demand for residential housing, for the people to provide better housing financial services, according to the PBOC, CBRC relevant documents, CCB actively implement the policy deployment, carefully studied and introduced to further improve financial services to specific housing measures to further improve the construction of affordable housing projects in financial services, households continue to support reasonable housing consumption, giving priority to meet the first set of household loans to purchase ordinary housing and general self-improvement type of housing credit demand. The main measures are:

First, increase the construction of affordable housing projects support. Adhere to risk control, sustainable business principles, and actively support eligible credit conditions in shantytowns and affordable housing construction projects. According to the national policy and local affordable housing priorities, select into government overall planning, good earnings shantytowns and affordable housing construction projects, timely intervention, reasonable running.

Second, actively support reasonable housing household demand for loans. Optimize business processes, improve service efficiency and the rational allocation of resources, and give priority to households to purchase the first set of their own homes and improve the type of housing loan demand. For a loan to buy the first set of family housing, the minimum down payment loan ratio was 30%, the lower limit of the lending rate is 0.7 times the benchmark lending rate. Determined by the difference between the borrower's specific factors such as buyers and their credit history, repayment ability.


No records for individual housing loans or home loans have been settled, under the name of non-family housing, apply for a loan to purchase a home, do the first suite loan policies. To own a home and have settled accordingly family home loans, to improve their living conditions to re-apply for loans to buy homes, may refer to the first suite loan policies. Specific operations in the hands of local branches.

Third, continue to support the financing needs of the real estate development enterprises reasonable. Implement the relevant policy requirements, merit-based support to meet the first set of high-quality customers and improve the type of demand-driven ordinary housing project funding requirements.

Construction Bank said it would closely follow the implementation of policies, and actively play financial functions, and always adhere to the Huimin housing, public services as the goal, and constantly enhance the residential housing consumption level of financial services, and strive for the support of the people round housing dream, to promote housing make new contributions to the healthy development of the market.

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