Chinese January mortgage growth hits record high

Experts suggest figures reflect housing transactions in later months of 2016, when sales were still brisk

PUBLISHED : Wednesday, 15 February, 2017, 2:46pm
UPDATED : Wednesday, 15 February, 2017, 11:01pm

Despite a flurry of new curbing measures since the start of this year, China’s mortgage lending growth hit its highest level in January since at least 2007.

Outstanding household medium-to-long-term loans, the closest indicator of home mortgages, grew by 629.3 billion yuan in January, compared to 607.5 billion yuan a year ago, and is the highest single monthly growth since 2007, the earliest year such data can be traced back.

The data was part of a broader January new credit data released by People’s Bank of China on Tuesday night.

Mortgage draw downs slow to a trickle as China tightens credits

On the surface, the red-hot mortgage data defies a series of mortgage policy tightenings introduced this year, but analysts said the increase was mainly due to the lag effect, in which the January data reflected housing transactions in late months of 2016, when sales were still brisk.

“Many homebuyers had their loan approved by banks a few months ago, but didn’t actually obtain the loan until January,” said Chen Ji, a senior researcher at Bank of Communications.

This robust level of transactions in the past few years could see the monthly mortgage growth flying high for another two and three months, and then taper off
Chen Ji, a senior researcher at Bank of Communications

“This robust level of transactions in the past few years could see the monthly mortgage growth flying high for another two and three months, and then taper off.”

Under the central bank’s “window guidance”, commercial banks have extended the average time between loan approval and disbursement from two months to three to four months.

Sporadic cases showed some borrowers had their applications approved in September and are still waiting for their mortgage. Such delays have already caused a surge in disputes between sellers and buyers, and some protests outside of banks.

Beijing shortens mortgage terms for city’s second-home borrowers

Mortgage discounts for first-time home buyers in Beijing, Shanghai, Guangzhou, Chongqing and Tianjin have been lowered to 10 per cent, from the previous 15 per cent off the benchmark rate, under the central bank’s directive. The tightening has been reflected in slumping home sales for January across major Chinese cities.

Chen said the mortgage rate increase will certainly discourage buyers from buying homes. But in largest cities, a more critical issue is the availability of mortgages, as banks remain under pressure to squeeze monthly mortgage supply.

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