Market Trends of China Home Mortgage Finance Industry
Favorable Mortgage Rates is Expected to Drive the Market
Due to the surge in the current property crisis in China, the country's central bank is cutting its benchmark interest rate for mortgages to tackle this situation. Loans for pre-owned homes can be taken out at interest rates below 5 percent for first-time homebuyers in cities including Shanghai, Guangdong province's Shenzhen, Heilongjiang province's Harbin, and Jiangsu province's Suzhou.
Home loans account for about one-fifth of the total bank loans in China, and with the falling interest rates, loans are being approved more quickly. Low-interest rates are an advantage for people who wish to buy a house through a loan. It takes about one month for applicants to receive their loans in the nation's 103 cities, including 19 cities that take less than 20 days. Almost 70 percent of the country's household wealth is stored in residential property, along with 30 to 40 percent of bank loan books, while land sales account for 30 to 40 percent of local government revenue. This is expected to grow the market during the forecasted period.
Government Regulations Boost the Market Growth
The government has eased mortgage costs through cuts in interest rates, relaxed some rules on ownership of multiple properties, and urged banks to lend more to homebuyers. This, in turn, is expected to boost overall lending in China. These measures taken by the government are aimed at reviving housing loan demand while keeping a tight grip on developers' leverage, highlighting the delicate balancing act Beijing has faced since the downturn in the property sector last year.
The government of China will offer 200 billion yuan (USD 29.3 billion) in special loans to ensure stalled housing projects are delivered to buyers; this will lead to the growth of this market during the forecasted period.
