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Banks urged to support first-home buyers
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CHINA’S central bank has urged commercial lenders to give priority to first-home buyers, who are currently suffering a loan-supply shortage, by offering them more efficient mortgage services.
The People’s Bank of China called 15 commercial banks, including the Big Five, for a meeting on Monday on how to improve mortgage services for homebuyers, the central bank said in a statement yesterday.
The state-run Big-Five banks are the Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China, the Bank of China, and the Bank of Communications, which are not only dominant players in the market, but also important executors of regulators’ policies and industrial models to guide the entire market.
The PBOC asked the lenders to properly allocate credit resources to prioritize first-home buyers’ need for mortgage.
About 30 percent of 69 bank branches in 22 cities raised mortgage rates by 5-10 percent above the benchmark lending rate in March, while around 60 percent stopped offering first-home buyers discounted mortgage rates, a report by the New York-listed China Real Estate Information Corp said.
Banks should bear social responsibility and show understanding and sympathy for people struggling to survive, Liu Shiyu, PBOC vice governor, told the gathering, according to the minutes of the meeting circulated online.
He emphasized the importance of inclusive finance, meaning that everyone should have a fair chance to access bank credit. Mortgage rates have increased due to growing consumer demand and rising funding costs for banks. With rate divergence emerging, Liu advised banks to price mortgages at similar rates.
ICBC, China’s top lender, currently extends home mortgages at the benchmark rate. China Merchants Bank has raised the rate 7.6 percent above the official rate. China CITIC Bank floats the rate 8 percent above the guidance rate, according to the meeting minutes.
The divergence of lending rates by different banks reflects the reality that larger banks tend to have more access to cheaper funds due to their advantageous customer base.
The central bank’s meeting came amid falling home sales and cooling home prices nationwide. Official data showed that sales of residential property dipped 7.7 percent in the first quarter of this year to 1.1 trillion yuan (US$177 billion).
Liu also asked the banks to accelerate mortgage approvals and loan distribution.
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