Mortgage broking first for China

International Finance Corp (IFC), the World Bank's private investment arm, has set up the mainland's first mortgage-broking joint venture with two other overseas financial firms to bolster the development of China's vast residential market.

Advantage China Holdings, the US$1.5 million joint venture, will provide home-mortgage origination, borrower credit analysis and contract-underwriting services to mainland banks.

IFC's East Asia and the Pacific director Javed Hamid said the introduction of more advanced international standards in mortgage-lending appraisal could help mainland banks lower lending risks and improve asset quality.

'Our company will help major commercial banks in China strengthen their credit-assessment capabilities in residential mortgage lending and expand their lending in a financially prudent way,' Mr Hamid said.

According to Ivan Ko, chief executive of Advantage Services Holdings, the fledgling home-mortgage market recorded a delinquency rate of only about 1 per cent due to the up-trends in property prices and in the economy as a whole.

IFC has agreed to take a 24.5 per cent stake in Advantage China for US$370,000.

Advantage Services Holdings, a Hong Kong-based mortgage-service firm, will take 51 per cent of Advantage China, while Netherlands Development Finance the remaining 24.5 per cent. The joint venture would begin operating in Beijing and expand into other major cities such as Shanghai, Shenzhen and Guangzhou soon, Mr Hamid said.