Tightened home loan measures in Shanghai fail to deter banks from expanding mortgage loan business

The Shanghai city government’s austerity measures in the home market, which include tightened credit to curb property purchases, don’t appear to be deterring banks from expanding mortgage loans in the city.

Instead, some bankers remain upbeat about the long term outlook for home loans in mainland China’s most developed metropolis.

“We recently raised the target on the size of the home loan business in Shanghai while strictly following the regulators’ crackdown on irregularities,” said a credit officer with one of the Big Five state-owned banks in Shanghai. “We still want to unlock untapped potential of the individual mortgage business whose asset quality is among the best of our personal loans.”

On the contrary, the lender will put the squeeze on unsecured personal loans.

Two foreign banks in Shanghai said they have no plans to slash mortgage business targets despite the cooling market.

“Of course we will obey the tightening, but we don’t see it necessary to change our business outlook,” said a source at one of the banks.

Local authorities have scrutinised mortgages among a string of curbs to put a brake on skyrocketing home prices in Shanghai. Grey home loans, or money borrowed for down payments, have been blamed for overheated buying sentiment and irrational price surges.