Ping An move points to curbs on property

A move by Ping An Bank to ban its regional branches from approving mortgages may signal that Beijing is set to tighten controls on the property market to calm record prices, sources said yesterday.

Rising property prices, which have pushed home affordability rates to new lows, have fanned speculation that Beijing will expand a three-year campaign to cool the market by cracking down harder on investment or speculative purchases.

Ping An's decision to have its headquarters take charge of home loans was likely a signal from the medium-sized lender that it anticipated a tougher policy line from the central government and was preparing to toe it, rather than a shift in strategy to better manage risks, said an analyst at ratings agency Fitch.

"I don't think this is related to risk management or rising credit risks. I think this is more related to macroeconomic policies," said the analyst, who declined to be identified because she was not authorised to speak to the media.

For now, bankers say Beijing has not further tightened controls and mortgage lending is proceeding as before. They regard Ping An's move as pre-emptive and unlikely to be followed unless forced to by Beijing as home loans are typically the safest assets in bank ledgers.

"There has been talk of possible tightening in mortgage lending, but we've received no notice from the headquarters to change current practices," said a loan officer at a major bank.

A second banker from another leading lender also said his bank had yet to change its mortgage lending practices.

Ping An said on Tuesday that it had barred all its branches from approving home loans and reduced mortgage lending in "recent years".

Ping An's move came a week after Beijing restated its intentions to expand a pilot property tax programme to more cities as it urged local governments again to control prices of new homes.

Despite concerns over record home prices, a source of discontent for ordinary folk and a concern for stability-obsessed Beijing, analysts and bankers have long argued mortgages are banks' best and safest assets.

High down-payment rates for home purchases have helped keep delinquency rates on mortgage loans low, analysts say.

"Mortgage loans should always be the safest assets for banks," the Fitch analyst said.