Real estate credit “stable and orderly” will not change

Real estate credit “stable and orderly” will not change

Market Information Network 2021-10-29 14:33:57 Source: Xinhua Net Comment:

Satisfy the reasonable funding needs of real estate companies, and guarantee housing loans for the rigidly-needed group

Real estate credit “stable and orderly” will not change

At present, there is speculation about “relaxing regulation” in the real estate market, and there are two main reasons. The first is that the risk events of individual real estate companies have triggered a chain reaction, and the regulatory authorities have frequently spoken out about this; the second is that a market monitoring agency found that in October this year, the personal housing loan interest rate fell for the first time.

Next, what is the trend of real estate credit? “Maintain the stable and orderly distribution of real estate credit, and maintain the steady and healthy development of the real estate market.” Zou Lan, Director of the Financial Market Department of the People’s Bank of China, said that the Party Central Committee and the State Council’s strategies and guidelines for real estate regulation are: It is a long-term follow to do a good job in real estate finance.

At the same time, the relevant person in charge of a number of commercial banks also told the Economic Daily reporter that for the development loans of real estate companies, the bank will stabilize and reasonable funding needs, continue to adhere to the principle of “optimizing enterprises and strict management”, and accurately grasp and implement real estate finance. Prudent management system; for personal housing loans, the bank’s incremental arrangement in 2022 will be basically the same as in 2021, focusing on ensuring the credit needs of the rigid needs group.

So, what is the reason for the previous tightening of real estate development loans? Is the risk exposure of individual real estate companies related to changes in bank credit funds? Is there room for personal housing loan interest rates to drop? What is the effect of illegal credit funds entering the property market?

Guarantee the reasonable credit needs of real estate companies

Recently, individual large-scale real estate companies have been exposed to risks, failed to repay due debts, some construction sites have been suspended, and pre-sold properties are uncertain whether they can be delivered on time. Some market voices believe that this is related to banks’ unanimous tightening of loans for real estate development.

Many people in the industry said that one of the important steps to implement the long-term real estate mechanism is to reduce the leverage ratio of real estate companies and prevent excessive concentration of real estate loans. To this end, the regulatory authorities have issued a number of policies last year. For example, for 30 key real estate companies, the Central Bank and the Ministry of Housing and Urban-Rural Development have established fund monitoring and financing management rules; the Central Bank has also established a “real estate loan concentration management system”, which requires banks to account for the balance of real estate loans and personal housing. The proportion of loan balance shall not exceed the corresponding upper limit.

Significant results have been achieved since the implementation of the policy. As of the end of September 2021, the growth rate of real estate loans has dropped to 8.6%, nearly 3 percentage points lower than the growth rate of all loans. Among them, the growth rate of real estate development loans has fallen sharply.

What needs to be clarified is that the main cause of risk exposure is poor management of real estate companies themselves. Take Evergrande Group as an example. The total assets of the group exceed 2 trillion yuan, and real estate development projects account for about 60%. “In recent years, this company has failed to operate cautiously in accordance with the changes in the market situation. Instead, it has blindly diversified and expanded. Its operating and financial indicators have deteriorated severely, and risks have eventually erupted,” Zou Lan said.

Therefore, for risk prevention and control considerations, banks have tightened credit funds, which to a certain extent caused a strain on the capital chain of real estate companies. On the one hand, many banks have experienced short-term and excessive market reactions, and their risk appetite for the real estate industry has dropped significantly; on the other hand, some banks have misunderstood the financing management rules of key real estate companies. “According to the rules, the balance of interest-bearing debts of’red file’ companies cannot be increased, but some banks misunderstood that banks are not allowed to issue new real estate development loans. No loan.” Zou Lan said.

“Next, real estate regulation will not be relaxed, but it is necessary to stabilize the reasonable funding needs of real estate companies.” The relevant person in charge of the Research Center of the Investment Banking Department of Industrial and Commercial Bank of China said that it is necessary to take into account the “prevention of excessive rises” and “prevention of excessive declines.” This relationship guarantees reasonable credit support from financial institutions to real estate companies, and guarantees that real estate companies operate normally and deliver buildings on schedule.

Priority for personal housing loans to protect rigid needs

Compared with the contraction of real estate development loans, the personal housing loan market is less tense. The Shell Research Institute recently issued a report saying that for the first time this year, the agency has monitored the decline in interest rates for personal housing loans. In October of this year, in the 90 cities it monitored, the first home loan interest rate was 5.73%, and the second home loan interest rate was 5.99%, both lowered by 1 basis point from the previous month.

Specifically, the personal housing loan interest rates in 20 cities have been lowered. Except for Guangzhou and Shenzhen, most of them are third- and fourth-tier cities, such as Zhongshan, Wuxi, and Huzhou. Among them, the first home loan interest rate was lowered in 14 cities, the second home loan interest rate was lowered in 14 cities, and the first and second home loan interest rates in 9 overlapping cities were all lowered.

What is the reason for the downward adjustment? “It depends on the region and is mainly affected by the demand side and the supply side.” Zeng Gang, deputy director of the National Finance and Development Laboratory, said that from the demand side, due to the decline in housing prices in second and third tier cities, the current Buyers have a strong wait-and-see atmosphere, and demand for home purchases has weakened in the short term, which has led to a decline in demand for personal housing loans and lower loan prices.

The latest data released by the National Bureau of Statistics on October 20 show that in September 2021, the sales prices of commercial housing in 70 large and medium-sized cities showed a slight downward trend compared with the previous month, and the year-on-year increase continued to fall. The sales price of newly-built commercial housing in second-tier cities has changed from a 0.2% increase in the previous month to the same level, and the sales price of second-hand housing has changed from a flat in the previous month to a decrease of 0.1%. The sales price of newly-built commercial housing in third-tier cities fell from the same level last month to a decrease of 0.2%; the sales price of second-hand housing fell 0.2% from the previous month, an increase of 0.1 percentage point from the previous month.

Zeng Gang said that from the supply side, the regulatory authorities have repeatedly emphasized the need to give priority to ensuring rigid demand. Therefore, various banks have increased their capital supply while giving interest rate tilt. Regulatory data shows that as of the end of July 2021, the proportion of first homes with personal housing loans has reached as high as 92%.

According to the relevant person in charge of China Merchants Bank, the bank will resolutely implement the requirements of real estate regulation and control policies and strongly support self-occupied rigid demand.

“Next, the China Banking and Insurance Regulatory Commission will continue to protect the credit needs of the just-needed group, and urge banks to support first-home buyers in terms of loan down payment ratio and interest rate.” said Liu Zhongrui, head of the Statistical Information and Risk Monitoring Department of the China Banking and Insurance Regulatory Commission. In addition, the China Banking and Insurance Regulatory Commission will increase its support for affordable rental housing, study detailed financial support measures, and work with the central bank to promote the pilot real estate investment trust fund.

Severe punishment for violations of laws and regulations

It is worth noting that whether it is the reduction of housing loan interest rates in some cities or the priority protection of rigid demand, it does not mean that the “master gate” of real estate loans will be relaxed, nor does it mean that supervision will be loosened.

“In the first three quarters of 2021, the amount of personal housing loans issued remained stable, basically matching the amount of commercial housing sales during the same period.” Zou Lan said. At the same time, in order to curb the rapid rise in housing prices in a few cities, the regulatory authorities have also targeted the region. Has achieved certain results in the credit extension of China.

Taking second-hand housing as an example, according to data from the National Bureau of Statistics, in September 2021, the sales price of second-hand housing in first-tier cities has changed from a 0.2% month-on-month increase to a 0.4% decrease. Among them, the month-on-month increase in Beijing, Shanghai, and Guangzhou was 0.4%, 0.2%, and 0.5%, respectively, to a decline of 0.2%, 0.6%, and 0.4%; Shenzhen fell by 0.5%, an increase of 0.1 percentage point from the previous month.

The reporter visited a number of banks and real estate intermediaries in the Beijing area and found that the current housing loan interest rates in the Beijing area have not fallen. Due to the end of the year and the superimposed policy control factors, the mortgage lines of many banks have generally tightened, and loans have to wait in line. “It can be predicted that when housing prices stabilize, the supply-demand relationship of mortgages in these cities will return to normal.” Zou Lan said.

Since the regulation has not been relaxed, what is the driving force for the rapid rise in housing prices in a few cities this year? The illegal entry of credit funds into the property market is the main reason. Recently, the Beijing Banking and Insurance Regulatory Bureau and the Shanghai Banking and Insurance Regulatory Bureau issued fines to the branches of a number of banks, all of which involved “appropriation of personal consumption loans for house purchases”, “personal business loans used for house purchases in violation of regulations and flow into the capital market in violation of regulations”, etc. .

The reporter learned during the interview that currently in Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing and other hot cities, the regulatory authorities have not weakened their efforts to rectify the situation. “We must resolutely curb the illegal inflow of credit funds into the real estate sector.” The relevant person in charge of the China Banking and Insurance Regulatory Commission said that the current special investigation of the illegal inflow of business loans into real estate has been basically completed. For the violations found, the establishment of a ledger is urged to rectify one by one to “clearing zero.” No”.

The person in charge said that in the future, all types of violations will be severely punished. “The China Banking and Insurance Regulatory Commission has been conducting national real estate special inspections for four years, basically covering all hot cities, and has zero tolerance for violations found. Issues must be held accountable in accordance with the law.”

Editor in charge: gaoxuejing1 Gao Xuejing