China’s new loan growth to fall further after sharp drop in October
Property cooling measures dent mortgage business, while corporate credit growth plummets on seasonal effect and sluggish demand
China’s credit growth is set to decelerate further in the coming quarters after it slowed by almost half in October, analysts said.
New loans growth last month came in at 651 billion yuan, 47 per cent lower than the 1.22 trillion yuan posted in September, but in line with Bloomberg’s median forecast of 672 billion.
Medium to long-term household loans rose 489 billion yuan in October compared with September’s 574 billion yuan growth. These represented 75 per cent of total new yuan loans last month.
“The growth was still strong due to the delayed effect of booming property sales in the past months,” China International Capital Corp (CICC) analysts wrote in a research report.
ANZ analysts Raymond Yeung and David Qu said in a note that the drop in household loans indicated that mortgage tightening measures imposed by local governments have started to bite.
Starting in the golden week holiday in early October, local authorities in at least 21 mainland cities have introduced measures to cool down the red-hot housing market, ranging from raising down-payments for first and second homes to limiting purchases of multiple dwellings.
As the demand for residential mortgages declines after the recent property tightening, we expect the growth of household loans to slow down further