Liu Wei/Sent from Beijing
On October 9, media reported that at the end of September, several banks conveyed notices from regulatory authorities, requiring local branches to increase their support for real estate financing. The specific indicator is to require each major bank to increase its real estate financing by at least 100 billion yuan this year, including real estate development loans, resident mortgage loans, and investment in real estate developers' bonds.
According to the message content, six state-owned banks including China Construction Bank , Industrial and Commercial Bank of China , Agricultural Bank of China , Bank of China , China Postal Savings Bank , and Bank of Communications have all conveyed regulatory requirements.
A person in charge of financing for a private real estate company revealed to reporters that according to his understanding, the news is true, but he said that "central enterprises and state-owned enterprise developers are the main targets of the new financing amount this time."
In recent years, the growth rate of real estate loan balances has continued to decline, and after 2020, it was lower than the growth level of various loans. At the end of June 2022, the growth rate of real estate loan balance was only 4.2%, less than half of the growth rate of the same period in 2021, and only one-third of the growth rate of various loan balances during the same period.
Another set of data shows that the proportion of new real estate loans has reached a low point, and there has been a sudden tightening. At the end of June 2022, the cumulative increase in new real estate loans was 0.67 trillion yuan, accounting for only 4.9% of the amount of new loans, a share of the lowest in recent years. Before 2021, the proportion of new mortgages to most of the new loans exceeds 20%, and the current proportion is only about one-quarter of the previous one.
According to the State Council Information Office held a regular briefing on the State Council’s policies held on September 5, the regulatory authorities will highlight key areas, weak links and support from industries affected by the epidemic. This includes ensuring the reasonable financing needs of real estate and reasonably supporting rigid and improved housing needs.
An industry insider said that in the first half of the year, the total mortgage loans and development loans of the six major banks to the real estate industry were about 600 billion yuan. If the 600 billion yuan can be implemented in the second half of the year, it means that the loans injected into the real estate industry by these six banks in the second half of the year need to double. It is self-evident in improving the liquidity of the real estate industry and promoting the recovery of the industry.
Regarding the main flow of this financing, he said that this is the result of market choice, and this fund will inevitably inject credit status and cash flow and real estate state-owned enterprises with better .
He believes that the 600 billion yuan will be injected into the real estate market in the form of mortgage loans, mortgage loans, development loans, flow loans, and bond purchases. Although it is only for the six commercial banks, it represents a signal from the policy side of the financial field to promote the recovery of the real estate market. Judging from the incident, the financing channels of real estate companies in the later stages are indeed taking this opportunity to expand.
Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban and Rural Planning Institute, believes that for a long time, banks have overly pursued the strategy of "collection of umbrellas on rainy days and delivery of umbrellas on sunny days", which has caused great ups and downs in real estate. When the real estate market declined, due to the tight capital chain, developers discounted promotions, resulting in a cycle of decline in housing prices and land prices, which led to a decrease in the protection effect of mortgages on bank debt . Then banks tightened financing and further tightened the funding situation of developers. In order to avoid a vicious cycle of systemic risks and the deteriorating overall expectations, it is necessary to correct the deviation in a timely manner.
The timely intervention of the regulatory authorities and increasing financing efforts are indeed measures to implement the reasonable financing needs of real estate companies. He said that in the specific implementation, real estate projects should be separated from corporate financing. Real estate projects companies and enterprises themselves are isolated legal entities, and it is necessary to ensure that the projects operate in a closed manner to ensure internal circulation of funds. The regulatory authorities' instructions to increase capital investment will help the positive cycle of real estate financing and will have a substantial impact on the real estate market.
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