The Big Four Banks Discuss "Differentiated" Real Estate Credit Policies
Every Friday, the real estate stocks experience unusual fluctuations. Stimulated by the news that "the Big Four Banks will fully implement differentiated housing credit policies," the real estate sector led the upward trend yesterday. The Shanghai Composite Index reached its highest closing level in nearly three and a half months at 2460.69 points, rising by 1.42%; while the Shenzhen Component Index closed at 10299.93 points, increasing by 2.38%.
Reports suggest that the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC), and China Construction Bank (CCB) recently held a seminar in Beijing. They proposed to continue comprehensively implementing differentiated housing credit policies with six specific measures: 1) meeting the loan demands for first-time ordinary housing purchases with reasonable pricing within the benchmark interest rate; 2) supporting high-quality enterprises in ordinary housing construction; 3) supporting affordable housing construction; 4) genuinely improving real estate financial services and enhancing loan approval efficiency; 5) strictly enforcing the minimum down payment ratio regulations for personal housing loans; 6) increasing innovation in financial products and service methods to comprehensively improve resource allocation efficiency.
"There is indeed such a matter," a person close to the People's Bank of China (PBOC) told *Jin Securities*. The seminar of the Big Four Banks mainly focuses on implementing the PBOC’s differentiated mortgage policy, which is also a reiteration of the PBOC’s previous policies. The CBIRC has not made any statements regarding this. "The consensus primarily targets first-home mortgage loans, and improving loan approval efficiency also refers to mortgage loans. It has little relation to development loans, which are still executed according to each bank's credit policies."
Regarding the heated market discussion on lowering mortgage interest rates, the individual indicated that banks currently mostly implement the benchmark interest rate for first homes, with no mandatory discount measures. "Currently, the overall mortgage interest rate, including existing loans, is around 90% of the benchmark."
Monita Real Estate analyst Shi Qi stated that the purpose of the Big Four Banks fully implementing differentiated housing credit policies is mainly to support the purchasing intentions of first-time homebuyers, alleviate developers' financial risks, and enhance their willingness to start new projects. "The industry fundamentals are improving, and the central government hopes to reduce the risk of a hard landing in the real estate industry by improving liquidity in the property market."
Zhu Yan, the chief banking analyst at CITIC Securities, believes that the real estate credit policy has not shown significant changes. All policies from the Big Four Banks only target first homes. However, she also admitted that as long as administrative interventions do not intensify, each bank will continue to follow commercial principles in terms of the scale and interest rate operations of mortgages. After comprehensively considering cost, risk, capital, and other factors, they will handle matters appropriately.
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