Mortgage Interest Rates Rising, 56 Instances of Policy Tightening

In Journey to the West, Sun Wukong wears a band that can be tightened by saying a spell. It is used to control him when he is behaving badly.

iFeng: 房地产金融戴上“紧箍咒”
Sogou: "Band-Tightening Spell" put on Real Estate Finance

56 times, according to statistics from Centaline Real Estate Research Center, the number of national real estate control policies in July once again exceeded the year's record. This also led to 307 real estate control policies nationwide during the year, up 18% from 260 in the same period last year. However, after the downward trend of mortgage interest rates ended and rebounded in June, many places such as Hangzhou, Guangzhou, Suzhou, Wuxi and so on have recently received signals of rising mortgage interest rates and slowing down the approval rate.

Following the April 19 meeting of the Political Bureau of the CPC Central Committee, which reiterated that "housing will not be sold", the regulation of the property market has been upgraded again in the near future. On July 30, a meeting of the Political Bureau of the Central Committee proposed for the first time that "real estate should not be used as a short-term stimulus to the economy". The central bank also pointed out that the real estate industry occupies more credit resources at the symposium on the adjustment and optimization of credit structure of banking financial institutions held on July 29.

Zhang Dawei, chief analyst of Centaline Property, said that in 2019, the year with the densest real estate policies, the financial risks of real estate rarely mentioned in the past were intensively mentioned. Cumulatively speaking, since this year, the central ministries and commissions have issued 15 speeches or policies, all requiring attention to prevent real estate financial risks.

Under the background of the continuous release of tightening signals by the state and the regulatory authorities and the continuous implementation of the long-term real estate regulation mechanism, there is a great potential for further tightening in both residential mortgage business and financing for housing enterprises.

Interest rates on residential loans in many places tightened.

Judging from the mortgage interest rate, according to a survey conducted by a reporter from the Financial Times, the mortgage interest rate of major Chinese banks in Beijing has remained at a minimum of 10% upward since this year, and has not changed even in the first five months when the interest rate continued to fall. However, according to a real estate intermediary, in the near future, banks have strengthened their examination of mortgage qualifications and the speed of lending has also decreased slightly.

Different from Beijing's "staying put", mortgage interest rates in many parts of the country are showing a further upward trend. In the first half of the year, Hangzhou's first mortgage interest rate generally increased by 5% to 8%, but now, many banks have begun to implement the policy of increasing the first benchmark by 8% or 10%.

Among the first-tier cities, Guangzhou rebounded in June. According to the data released by Rong360 Big Data Research Institute, six banks in Guangzhou raised the mortgage interest rate in June, and Everbright Bank was the first to adjust the loan interest rate for the first suite to 20% above the benchmark.

In fact, the inflection point of bank mortgage interest rate appeared in June. According to agency data, the national average interest rate for first-home loans was 5.423% in June, up slightly from 5.416% last month. The average interest rate for second-home loans is 5.75%, which is also higher than 5.74% last month.

"In July, mortgage interest rates in some areas increased frequently, and more and more cities began to raise mortgage interest rates. However, the specific impact of the meeting of the Political Bureau of the Central Committee on mortgage interest rates is still uncertain. It needs to be seen in the light of whether there will be any specific adjustment measures in the future and the activity of transactions in the housing market. " Li Wanfu, an analyst at Rong360 Big Data Research Institute, told Financial Times reporters.

Strict control of real estate credit

"We will strictly check the' down payment loan'. For all kinds of consumer loan products, after lending, we will monitor the direction of the borrower's bank flow; For loans with specific purposes such as decoration loans, invoices need to be verified. Once it is found out that the loan funds are used for down payment, we will ask them to repay the loan in advance. " A joint-stock bank official said.

The risks existing in the mortgage business have already aroused great attention from the regulatory authorities. "In recent years, the leverage ratio of household departments in some cities in China has risen rapidly. A considerable proportion of households have reached unsustainable levels. What is more serious is that about half of the new savings resources in the whole society have been invested in the real estate sector." Guo Shuqing, Party Secretary of the Central Bank and Chairman of the China Banking Regulatory Commission, said at the Lujiazui Forum held in June.

In response, at the forum on the adjustment and optimization of the credit structure of banking financial institutions, the central bank proposed to maintain the continuity and stability of real estate financial policies. To maintain a reasonable and moderate growth of personal housing loans, it is strictly prohibited to use consumer loans to purchase houses in violation of regulations, and to strengthen the management of funds flowing into real estate through bank financing, entrusted loans and other channels.

Li Wanfu believes that "next step, the bank may adjust the conditions and amount of personal housing loans appropriately, at the same time, increase the proportion of consumer loans and personal business loans in retail loans, and strictly control the flow of consumer loan funds to the property market."

At the same time, the problem of real estate financing has also attracted attention. "Some real estate enterprises' excessive financing has diverted credit resources, further reducing the efficiency of the use of funds and encouraging speculation in real estate investment." Guo Shuqing said at the Lujiazui Forum.

Of the 56 real estate controls in July, nearly 10 were issued by the central ministries and commissions, of which there was a lot of tightening of funds for real estate enterprises. "Especially since July, we have issued two consecutive capital tightening policies for real estate trust and US dollar debt, both of which are aimed at real estate alone. The expectation of tightening policy is getting stronger and stronger. " Zhang Dawei said.

At the forum on the adjustment and optimization of the credit structure of banking financial institutions, the central bank also requested to strengthen the supervision and risk warning of the financing behavior of large housing enterprises with high leverage, and to reasonably control the scale of interest-bearing liabilities and asset-liability ratio of enterprises.

"For the public sector, banks may improve the conditions for loans for real estate development, and at the same time invest more credit funds in the manufacturing industry, small and medium-sized micro-enterprises and other directions currently encouraged by the state." Li wanfu predicted.

Building a Long-term Mechanism

"This meeting of the Political Bureau of the Central Committee will mark another stage of upgrading of real estate regulation." Zhang Dawei said that July was a node for real estate regulation to be upgraded again. Not only did the content of real estate regulation policies continue to be published frequently throughout the month, but the central government also made it clear for the first time that real estate would not be used as a tool to stimulate the economy, and the long-term mechanism would continue to accelerate its landing.

"Under the background of increasing downward pressure on the economy, the emphasis on' housing is not speculation' reflects the decision-making authority's firm attitude towards real estate regulation." Societe Generale believes that the request of the meeting of the Political Bureau of the Central Committee to "implement a long-term management mechanism for real estate" means that the real estate regulation will continue to be tight and the regulation policy will be more stable and continuous. With the long-term regulation, the market's expectations for housing prices will be more stable, and real estate sales may continue to decline in the second half of the year.

Compared with the previous meeting of the Political Bureau of the CPC Central Committee, this meeting did not mention such contents as "implementing policies for each city" and "implementing policies for each city". As for this, Zhu Jianfang, chief economist of CITIC Securities, believes that the real estate policy in the second half of the year will be tightened compared with that in the first half of the year, which is also consistent with the current tightening of financing support for real estate enterprises.

"The real estate market is under strict control, and' patching' measures against the rise in real estate prices continue to appear. It is expected that in the second half of 2019, the national real estate market will still be under two-way control. cities with stable house prices will not rule out loose policies, but as long as the increase is obvious, real estate control will definitely increase. " According to Zhang Dawei.

"From the point of view of credit interest rate, it is not excluded that the interest rate for real estate will be raised again." Zhang Dawei said that as long as there is no obvious change in the credit policy, the adjustment of other policies will have very limited impact on the property market. At present, the real estate policy is still fine-tuning more and more policies except credit, but the overall policy fundamentals remain relatively tight.