On October 8, the People’s Bank of China announced the development of the mortgage supplementary loan (PSL) in September 2022. The China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China added a net new mortgage supplementary loan of 108.2 billion yuan. The balance of supplementary mortgage loans at the end of the period was 2,648.1 billion yuan.
Data shows that this is the first time since February 2020 that the balance of supplementary mortgage loans has shown positive growth, and the monthly net increase has returned to more than 100 billion yuan after many years.
Industry insiders believe that the re-emergence of mortgage supplementary loans after many years means that the People’s Bank of China may have provided financial support for policy banks, which is expected to guide policy financial institutions to increase financing support for weak links and key areas of the real economy, and give full play to the adverse effects. cycle regulation.
Structural monetary policy with precise force
In addition to the re-lending tool, the People’s Bank of China can also provide more reasonable and effective financial support for specific fields, specific regions and specific projects through mortgage supplementary loans.
In April 2014, the People’s Bank of China established mortgage supplementary loans, which mainly serve key areas such as shantytown renovation, underground pipe gallery construction, major water conservancy projects, and “going out”, and are issued to China Development Bank, Agricultural Development Bank and Export-Import Bank .
According to Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, mortgage supplementary loans can provide policy banks with long-term, low-cost funds, guide financial institutions to support the development of key areas, weak links and social undertakings in the national economy, and help reduce the pressure on fiscal expenditures , through the release of long-term liquidity and targeted credit, to further dredge the transmission of monetary policy.
“What is different from re-lending tools is that supplementary mortgage loans are issued by means of pledge, and qualified collateral includes high-grade bond assets and high-quality credit assets.” Zhou Maohua said.
As one of the structural monetary policy tools, the mortgage supplementary loan is positioned as a phased tool with a clear implementation period or exit arrangement. Since May 2019, as the shantytown reform is coming to an end, the monetization resettlement has been significantly weakened, and the balance of mortgage supplementary loans has steadily declined. As of the end of June this year, the balance of supplementary mortgage loans fell to 2.62 trillion yuan.
Ren Tao, deputy general manager of the Development Research Department of the International Bank of Macau, believes that the mortgage supplementary loan has been “activated” again after many years, which will help to give full play to its basic functions of “special purpose, dedicated funds, guaranteed capital and low profits, and ensured safety”. This also means that the structural monetary policy is precisely exerted.
Supplementary funds for policy finance
Since the beginning of this year, policy-based finance has made frequent efforts, including the increase of 800 billion yuan in credit for policy banks to support infrastructure, the deployment of more than 600 billion yuan of policy-based development financial instruments to supplement capital for major projects, and the provision of 200 billion yuan for “guaranteed construction”. Yuan special loans, the total amount reached 1.6 trillion yuan.
The increase in credit supply on the asset side means that the debt side should also increase fund-raising efforts accordingly. In an interview with a reporter from the Shanghai Securities News, the Agricultural Development Bank said that it will raise funds through channels such as issuing bonds, absorbing deposits, and applying for supplementary mortgage loans from the central bank.
The reporter learned from the industry that the mortgage supplementary loan has the characteristics of long term and low cost, which is more suitable for the characteristics of infrastructure projects with long payment time and low rate of return. According to the latest information released by the People’s Bank of China, as of the end of June 2022, the mortgage supplementary loan interest rate is 2.8%.
Zhou Maohua said that at present, my country’s economy is at a critical point of recovery, and it is of great significance for the People’s Bank of China to re-enable mortgage supplementary loans. It is expected that the funds will be used first to ensure financing in key areas of the real economy, and to drive employment through further expansion of effective investment.
Policy-based finance makes efforts to stabilize investment
Policy-based development financial instruments were launched rapidly. Recently, the China Development Bank, the Agricultural Development Bank and the Export-Import Bank of China have completed the investment of 600 billion yuan of policy development financial instruments in only 70 days.
Policy-based development financial instruments have supported a large number of national key infrastructure projects, and have allocated resources to major economic provinces, leveraging investment leverage to drive steady economic growth. According to the calculation of the Tianfeng Securities Bank team, it is estimated that the two batches of financial instruments totaling 600 billion yuan can leverage 1.2 trillion yuan of project capital, and the total investment will be about 6 trillion yuan.
Policy-based finance leveraged various funds to support infrastructure, and commercial banks and social capital quickly followed up, injecting medium and long-term funds into project construction. China Everbright Bank disclosed that as of September 16, it had invested 6 supporting financing for major national projects, with an investment amount exceeding 100 million yuan, and 17 credit lines had been approved, with a total amount of more than 10 billion yuan. China Construction Bank said that as of September 26, the two batches of infrastructure fund credits totaled 281.6 billion yuan, ensuring the effective advancement of supporting financing for fund projects.
The work of “guaranteing the handover of the building” has also been quickly implemented. On September 22, China Development Bank has paid Shenyang City, Liaoning Province, the country’s first special loan for “guaranteed handover of buildings” to support the “guaranteed handover of buildings” project in Liaoning. On October 1, the Agricultural Development Bank disclosed that the bank’s “guaranteed handover” special loan work has been completed.
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