China Mortgage Lending Grows 32.2pc in 1H 2016, Leverage Soars

Mortgage lending increased 32.2 percent in the first half of 2016, rising 2.3 trillion yuan. The average monthly increase was 393.3 billion yuan, up from 69.3 billion yuan in 2011, an increase of nearly 500 percent.

China's household mortgages are now worth about 25 percent of GDP, equivalent to Japan at the peak of its housing bubble. If growth continues for three more years, Chinese mortgages would approach current U.S. levels.

Haitong Securities says easy money, higher prices and strong sales are helping to drive credit growth, along with rising leverage. In 2011, the average ratio of new loans to sales was 17.3 percent. In 2015, this increased to 36.7 percent. In 2016, it has hit 56.5 percent, a new all-time high. At the peak of the U.S. housing bubble in 2007, this ratio was 52.6 percent.

First half 2016 new mortgages were equivalent to 6.4 percent of GDP. The peak in Japan was 3.0 percent; in the U.S. 8.0 percent.

Leverage ratios tend to peak with demographics and China's dependency ratio bottomed out in 2011, so the peak is not far away. The numbers alone are unsustainable, but it's unlikely growth will continue even in the second-half, as multiple articles, official media outlets and government officials have warned. Since China's Monetary Cycle IS Driven By Real Estate, a downturn in mortgage growth will have to be made up elsewhere, otherwise deflationary forces could ripple out beyond the housing market.
Average Monthly Increase in New Mortgage Loans
August 5, the central bank in the second quarter monetary policy report noted that the first half of individual housing loans increased 2.3 trillion yuan, an increase of 1.2 trillion yuan, the growth rate reached 32.2% at end-June, the monthly increments also hit record highs, this mainly due to the first half of real estate sales growth higher, driven by rapid growth in housing loans to individuals.
iFeng: 央行公布个人房贷增量数据 专家称已达日本90年代水平

PBoC 2nd Quarter Monetary Policy Report: 2016年第二季度中国货币政策执行报告

Other notable items in the report. Cross border payments by month (blue goods, red services):

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