First home interest rates fall, bank lending accelerates Real estate market expectations are improving

Reporter Guo Ziyuan

At present, a series of positive changes are taking place in the real estate market. On the one hand, the interest rate and down payment ratio of the first home loan in many places have declined, and the decline in market sales has narrowed significantly; On the other hand, the financing environment for real estate enterprises continued to improve, and the decline in real estate development investment narrowed.

Unleash demand further

Unleashing rigid and improved housing demand is a key measure to promote healthy and sustainable development of real estate. Reducing mortgage interest rates and down payment ratios is conducive to further releasing market demand.

Data show that the average interest rate of the first set of mainstream housing loans in Shell Baicheng in March this year was 3.4%, a slight decrease of 02 basis points from the previous month; The interest rate of the second set of mainstream mortgages averaged 2.4%, unchanged from the previous month. From the perspective of interest rate reductions, mortgage interest rates in third- and fourth-tier cities fell the most year-on-year, with the first and second home loan rates falling by 91 basis points and 140 basis points respectively.

"As of the end of December 2022, the average interest rate on new personal housing loans was down approximately 12 basis points from the end of the previous year. Except for a few hot cities, the lower limit of the down payment ratio policy in most cities has reached the bottom line of the country. Pan Gongsheng, vice president of People's Bank of China, said that from the demand side, the implementation of differentiated housing credit policies according to urban policies and the continuous guidance of real interest rates and down payment ratios will better support rigid and improved housing demand.

At the same time, the speed of bank lending has also increased. The data shows that the average lending cycle of Shell Baicheng Bank in March was 3 days, 21 days shorter than the previous month. "Home mortgages are still a quality asset for banks." Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that the scale of commercial bank credit in the first quarter was relatively abundant, and the speed of lending was also increased to a certain extent.

"Driven by a series of policies, there have been some positive changes in the real estate market, mainly reflected in the significant narrowing of the decline in market sales." Fu Linghui, director of the National Economic Comprehensive Statistics Department of the National Bureau of Statistics, said that in the first two months of this year, the sales area of commercial housing fell by 2.3% year-on-year, and the decline narrowed by 6.20 percentage points.

Fix supply-side expectations

In addition to the demand side, there have also been many positive changes on the supply side. Data show that real estate development investment in the first two months fell by 2.5% year-on-year, a decrease of 7.2022 percentage points from 4; the funds in place for real estate development enterprises fell by 3.15%, a decrease of 2.10 percentage points; the real estate development prosperity index in February was 7.2, up from January.

"At present, China's economy is showing a trend of stabilization and recovery, and it is expected to be good, which will help the decline in real estate investment narrow." Lou Feipeng, a researcher at the Postal Savings Bank of China, said that around improving the financing of real estate enterprises, the financial management department has introduced a number of policies and measures, and the "three arrows" of credit, bond and equity financing have been launched to continue to alleviate the financial pressure of real estate enterprises.

Since last year, the financial management department has issued 16 financial policies and measures to support the stable and healthy development of the real estate market, and has continued to promote the detailed implementation of policies. At present, the financial management department is carrying out four actions of "asset activation", "liability continuation", "equity supplement" and "expected improvement", and fully implements the plan to improve the balance sheet of high-quality housing enterprises. At the same time, it alleviates the excessive risk aversion of financial institutions and guides financial institutions to provide normal financing. Data show that in January this year, real estate development loans increased by more than 1 billion yuan, an increase of 3700 billion yuan year-on-year.

In addition to the improvement in the financing environment, the credit risk of the real estate industry has also converged. "We believe that the risk spread trend of housing enterprises in the past has been curbed, and the liquidity of housing enterprises has been significantly improved." Hu Gang, vice president of China CITIC Bank, said. According to the 2022 annual report recently released by China CITIC Bank, as of the end of December 2022, the asset quality of the bank's real estate and construction industries continued to show an upward trend, and the balance of non-performing loans in the two industries decreased by 12.17 billion yuan and 89.12 billion yuan respectively from the end of the previous year.

"Although the financing environment has improved, the willingness of housing enterprises, especially private housing enterprises, to start new construction is still insufficient." Wen Bin, chief economist of China Minsheng Bank, said that it is expected that the growth rate of real estate development investment may still fluctuate during the recovery process. Lou Feipeng believes that the main reason for this phenomenon is that the expectations of housing enterprises are still not good, so it is necessary to comprehensively stabilize and improve expectations.

Increased confidence remains key

In February this year, the sales price of newly built commercial residential buildings in first-tier cities increased by 2.0% month-on-month, the same increase as the previous month; Second-hand residential sales prices rose 2.0% month-on-month, an increase of 7.0 percentage points from the previous month.

"At present, the recovery of the second-hand housing market and the market heat are slightly higher than the new housing market." Wen Bin said that on the whole, the sustainability of the market recovery remains to be seen.

"The uncertainty of second-hand housing is low, and its demand depends on buyers' expectations as well as rigid demand. In contrast, there is uncertainty about new homes, after some homes could not be delivered on time, which affected buyers' wishes. Zeng Gang said.

Luo Yifei, chief statistician of the Investment Department of the National Bureau of Statistics, said that it is necessary to continue to release the rigid and improved housing demand in the real estate market, promote the construction of the "guaranteed handover building" project, and gradually boost market confidence. "Last year, the policy of 'guaranteeing the handover of buildings' played an important role in ensuring people's livelihood." Fu Linghui said. At present, the regulatory authorities have launched a special loan of 3500 billion yuan to guarantee the delivery of buildings, set up a 2000 billion yuan guaranteed delivery loan support plan and a 1000 billion yuan rental housing loan support plan, and guided financial institutions to promote industry restructuring and mergers and acquisitions and accelerate the market-oriented clearance of risks.

"The most important thing now is to look at market confidence and changes in demand, mainly changes in first-hand sales." Hu Gang said. First-hand house sales are the direct sale of new houses by housing enterprises to individual customers, and its warming means that the capital flow of housing enterprises is good, which helps alleviate the financial pressure of housing enterprises and resolve risks. "In real estate transactions, although the situation varies from place to place, on the whole, the transaction volume of first-hand houses is large, and its sales recovery represents a recovery in demand, which has certain indicative significance for the study and judgment of the real estate market trend." Lou Feipeng said.

"The RRR reduction recently implemented by the central bank can increase the medium and long-term loanable funds, which will help enhance the enthusiasm of financial institutions to support housing enterprise financing and meet the reasonable financing needs of housing enterprises." Wen Bin said the RRR cut would free up low-cost funds and also help support rigid and improved housing demand through differentiated lending rates.

"At present, it is necessary to further stabilize the expectation of residents' income growth." Zeng Gang said that for residents, housing loans are long-term liabilities, and their willingness to spend and solvency depend on their stable employment and income growth. Therefore, it is necessary to increase the income of urban and rural residents through multiple channels and maintain the overall stability of the price situation.