Down Payment Loan Crackdown in Full Swing; Estimated at 5 Billion Total Over 8 Months

The subprime excesses notwithstanding, the bigger issue here is China's housing market went from moribund to reaching U.S. subprime excess in less than 6 months, following the bursting of an epic stock market bubble. A wave of excess liquidity is flowing through the Chinese economy and shows up periodically as investment bubbles

SCMP: China to crackdown on loans for property down payments to help cool overheating market, reduce risk of bad debts

“Funds used for down payments cannot be borrowed” he said.

Abuse of the system led to banks later offering loans to homebuyers without a clear picture of their clients’ real financial situation, said Zhou.

Vice-governor Pan Gongsheng said the central bank and other government departments would crack down on all abuse which evaded housing credit policies, including offering down payment loans.

“Property agencies and developers are not qualified to conduct financial business. They are illegally doing financial business,” he said. “This business they are engaged in, and jointly with peer-to-peer lenders and down payment credit firms, has not only raised the leverage of residents’ house purchases, worn down the effectiveness of macro policy controls and added to financial risks, but has also increased risk in the property market.”

Zhou said the real estate sector was under great pressure to sell unsold flats.

Prices vary greatly in different areas of the country, but have surged in first and second-tier ­cities.

China Daily: China to crack down on grey-market home loans: PBOC official

China will act hard against home loans raised in the grey market to ward off risks, a central bank official said Saturday.

The practice of granting loans by real-estate developers and agents to home-buyers to pay down payment increases risks to the property market and financial system, said Pan Gongsheng, vice governor of the People's Bank of China (PBOC), at a press conference on the sidelines of the annual parliamentary session.

The central bank will work with other government agencies to rectify the problem, he said.

An estimate of downpayment loans puts the total amount at about 5 billion over 8 months. This is at best a low ball conservative figure.

Stockstar: 首付贷规模数据曝光50亿规模引风险之争

March 10, Ying Chan released the first consulting its latest report, he said: "total turnover of nearly eight months reached 43 billion, due to the relatively small down payment in July 2015 before the loan transaction size, so P2P net loan amount of down payment mortgage industry participation pattern less than 5 billion yuan is expected. "

A reduction in the number of P2P financing platforms helped limit growth.

According to the Bank rate network statistics database, in February 2016, the national new P2P platform 71 issue, last month decrease of 10.1%. From the monthly data, the number of internet problem remains high, but a significant decline in the number of new platforms, after December 2015, the number of platforms has been a problem for three consecutive months exceeded the number of new platforms, "eliminating the weak" phase will last a longer time.

...according to incomplete statistics, the results of 8 months of data from July 2015 to February 2016 respectively: 269,776,400 yuan, 359,200,200 yuan, 410,199,400 yuan, 367,369,000 yuan, 646,069,200 yuan, 821,151,200 yuan, 924,491,500 yuan, 515,136,900 yuan.