Beijing Mortgage Volume Tumbles as Rates Rise

21st Century: 北京房贷飙涨行情:按揭贷款量跌价升,房企发债成本攀升
In a short period of one and a half years, Beijing’s real estate mortgage loan market experienced an increase in interest rates from a 20% discount on the benchmark interest rate (4.9% annualized) to 15%, 10%, 5%, no discounts on the basis, and then a 5% increase. Even today, there is a general increase of 10% (5.39% annualized) in the market.

A number of real estate analysts said that the main reason for the recent upward adjustment in mortgage rates is the rise in bank funding costs. According to data released by the Central Bank, the weighted average interest rates for inter-bank lending for the period from January to April this year were 2.78%, 2.73%, 2.74%, and 2.81%, respectively, and the overall trend was upward.

Regarding whether the interest rate on mortgage loans will be raised again afterwards, the credit business managers of many banks have indicated that they are not clear, but this possibility is not ruled out.
Loan growth is plummeting:
According to the latest statistics released by the Beijing Business Management Department of the People's Bank of China in April, the statistics on Beijing's money and credit statistics also showed that at the end of April, the RMB loan balance of Beijing residents was 1.68 trillion yuan, an increase of 10.6% year-on-year, and an increase of 33.72 billion yuan over the beginning of the year. A decrease of 69.95 billion yuan over the same period of last year.
In other words, loan growth fell 67 percent. That credit deceleration will leave a market in the real estate sector and then the wider economy.
The capital chain is tight, and the price of overseas bond issuance rises

The cost of funds for people who buy a house is rising, and people who sell the house are not so comfortable.

With the limited financing of domestic real estate companies, the eyes of the housing enterprises have turned to overseas. According to wind data alone, from the beginning of 2018 to May 22, 2018, domestic real estate companies have announced plans to issue 61 gulf bonds, and the total issuance has exceeded 24 billion U.S. dollars, a substantial increase of about 105% from the same period last year.
The same thing happened during the last tightening/real estate crackdown cycle. Most borrowers may simply be rolling over existing foreign debt though:
In addition, although overseas channels for issuing bonds still exist, interest rates have shown a trend of soaring. For example, Hydoo International issued US$130 million in bonds on May 9, and interest rates have been as high as 12%. Landsea Green Group’s US$150 million green priority notes issued in April have interest rates as high as 9.62%. From the average cost point of view, the wind data shows that the average cost of issuing overseas bonds by housing enterprises from 2018 to present is 6.67%, which is 0.4% higher than the annual figure of 6.27% in 2017, and is a significant increase of 1.74 percentage points from 2016. .

On the other hand, from the perspective of the use of overseas bonds issued by real estate companies, most of them belong to the old and new. Wind data shows that in the second half of this year, overseas financing of real estate bonds expired at a scale of 56.475 billion yuan, and the expiry date in 2019 reached 143.695 billion yuan. The 130 million US dollars notes issued by Hydoo International also stated that most of them were used to repay debts.
The last cyclical downturn was aborted when China restarted credit growth and the U.S. Dollar Index peaked.

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