China calls on banks to boost mortgage securities market
Central bank and regulator's call comes in bid to revive financing for flagging homes sector
The mainland's central bank and banking regulator have called on lenders to create a larger mortgage-backed securities market as part of an effort by the central government to revive a flagging real estate sector.
The notice on real estate finance was jointly issued by the People's Bank of China and the China Banking Regulatory Commission late last month but reported by People's Daily on Sunday.
It represents the first time the two regulators have come out in favour of a bigger mortgage-based securities market since it was restarted this year after a six-year hiatus.
"This is an incentive policy from the government to bring some relief for some financing channels to the market," said Yang Junhao, a securitisation analyst at ratings agency China Chengxin International.
Commentators in People's Daily said up to one trillion yuan (HK$1.3 trillion) in mortgage loans should be securitised, a sizeable amount given that the mainland's mortgage-backed securities market was still growing, Yang said.
The mainland market for securitised debt opened in 2005 but was shut down in 2009 after United States mortgage securities helped bring on the global financial crisis.
Postal Savings Bank of China issued 6.8 billion yuan in residential mortgage-backed securities in late July in the first mortgage-backed securities (MBS) issuance since 2007.