As mortgages grow scarce in China, homebuyers turn to car and college loans, firm says
Research company says new funding channel being used to circumvent government efforts to cool property market
Chinese borrowers are turning to a new funding channel to snap up properties – short-term consumer loans usually reserved for cars or an education – as the mortgage landscape continues to shrink, a research firm says.
According to E-House China R&D Institute, the amount of “irregular” consumer loans taken out since March reached 370 billion yuan (US$56.18 billion), with at least 80 per cent going towards property payments.
The biggest number of borrowers were recorded in Shanghai, and Guangdong, Fujian, Jiangsu, Sichuan and Hebei provinces, which saw high levels of irregular personal lending, according to the company.
A spike should be accompanied by an increase in consumer sales, but retail figures have generally been flat, suggesting mainlanders were instead ploughing the funds into the real estate market.
“Home prices are so high in some big cities, buyers are being forced to seek consumer loans to fund their down payments,” said Zhao Yang, Hong Kong-based chief China economist at Nomura Holding.