2014-10-08

Banks Won't Profit Offering More Than a 15% Mortgage Discount

This article says 15% is probably the limit for banks in terms of mortgage discounts, and mortgage backed securities (MBS) are a long-term solution to mortgage credit limits.

21st Century Business Herald: 负债成本制约利率打折 MBS料成银行加大房贷投放重要手段

September 30, the central bank, the CBRC issued a notice, to make adjustments to our mortgage policy. Among them, the pair have a settled family housing units and has a corresponding purchase loan application to improve the living conditions of ordinary commercial housing loans to buy again, perform the first suite loan policy; first mortgage interest rates lower limit of 0.7 times the benchmark rate.

However, the industry is widespread concern: the cost of debt in the bank gradually increased, spreads, spreads and gradually narrowing the case, the bank is really willing to put in efforts to increase personal loans, as well as the implementation of 70% of loan interest rates ?

The notification also said financial institutions to enhance the ability of individual housing loans to encourage banking financial institutions by issuing mortgage-backed securities (MBS), a variety of measures issued for a period longer special financial bonds to raise funds dedicated to increasing the first sets of ordinary housing and improve the type of ordinary housing loans.

The idea that, MBS in the future will be one of the important means to increase the bank's housing loans.

Industry: less than 85% off the bank profitable

Huaxia Bank's Development Research Department Head Yang Chi strategic room for the "Daily Economic News" reporter, said, in general, the New Deal will help to improve the type of housing groups, compared with the previous one size fits all, recognition of the housing and credit recognition policy progress. After the name of the house in order to enjoy the preferential policies also finished first suite loan, also reflects a prudent approach to financial regulators to control the overall debt expansion.

But Yang Chi also believes that if the New Deal mortgage can fully activate the current downturn in the real estate market, needs further observation coping strategies of the commercial banks. Relatively small consumer loans and micro-enterprise loans, the yield is low personal housing mortgage loans, the interest rate is close to 30% off the cost of bank debt, bank profitability requirements determine the allocation of resources can not come up with much credit personal loans varieties .

Lian Ping, chief economist at Bank also told the "Daily Economic News" reporter, said the cost of the mortgage, the interest rate is unlikely to fold down to seven. Currently, the bank's cost of debt has been greatly improved compared to previous years, the cost of debt rose, according to the current general liability cost, then consider narrowing spreads, spreads narrowed, if less than 15% of housing loans Banks have no money, and in the 10% or so banks may also be willing to do. On the one hand, financial institutions should support the development of the mortgage business goals and improve people such as decision-makers hope to achieve, on the other hand, we must consider the business sustainability.

"First, look at how to find ways from the benchmark, the benchmark interest rate down to less than the benchmark, may be too far off 7; Second, the relationship between the size and price point of view, the state encourages, supports, and promote, the bank will put some more loans, but if the price dropped to the sustainability of commercial banks can not afford, it is unlikely to launch a large-scale loans, so prices and policies need to be balanced; Also, if there is no demand, the loan did not put objects of real estate this year housing turnover dropped significantly, we can not say the mortgage lending less, there is little demand for a reason. "Lian Ping analysis.

MBS conducive to revitalize the stock of mortgage

Such notice also said that the banking institutions are encouraged to support a variety of measures mortgage securities, issued for a period longer special financial bonds to raise funds through the issuance dedicated to increasing the first set of ordinary housing and improve the type of ordinary housing loans .

This means that regulators view, by MBS revitalize the stock of housing loans to banks, but also to promote an aspect of bank lending.

In July, the Postal Savings Bank in 2014 to support the first phase of individual housing loans securitized products in the national inter-bank bond market, the scale of 6.814 billion yuan. Looking at the results from the issuance, the weighted asset base interest rate of the product is 5.88%, MBS issuance rate is 5.8% and 6.79%. The industry believes that the product release rates fell substantially limit the range of the tender, the tender was subscribed to explain the situation is not very satisfactory.

In fact, as early as in 2005, banks have been involved in personal housing loan securitization. Year in December, sponsored by CCB as the first single individual domestic agency mortgage-backed securities - "Chien 2005-1 mortgage-backed securities" into the national inter-bank bond market.

Lian Ping believes that banks can not say in mortgage lending is "credit crunch." And corporate loans, compared occupied housing loans of bank capital, the risk provision is relatively small, so keep a certain scale, the bank is still willing.

"Asset securitization of individual housing loans will be used as the development trend should be clear, but all aspects of the market mechanism, the operation mode is not very suitable for its development, remains to be seen, regulators and monetary authorities are still willing to push the market should also be well adapted to this demand, so the mortgage loan securitization continued to move forward, so that commercial banks do not have to worry about, the hands of the assets can be transferred out, make quota, better support for mortgage loans. "Lian Ping said.

Professor at the Central University of Finance and Guo Tian Yong also believes that housing loan securitization will become an important means of banks.

Yang Chi said that to revitalize the mortgage market, you need to have supporting measures to encourage commercial banks to make an inventory of the stock of mortgages through MBS put to address the scale of the problem. In addition, if a large number of seven previous years put off rate mortgage revitalize the commercial banks will develop a higher yield mortgage business, MBS will be an important measure for future launch.

Previously, industry sources have told reporters that the securitization of individual housing loans compared to regular bank credit support securities to be complicated, "If it is the issue of corporate loans securitization, the bank took out a maximum of two or three loans, and without system reform, some accounts from table to table to the direct hand account can be changed, but the individual housing loan securitization, the bank basically to come up with tens of thousands of loans in the asset selection, due diligence, data extraction also has a lot of work to do, and assets of the table a lot of work, you need to have a centralized IT system support, there are still some bank branches Cabanatuan housing loans, make up more trouble. "

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