Housing developments in Fuzhou. (File photo/CNS)
At a time when China's property market is undergoing a downturn, property developers are cutting house prices and domestic governments are relaxing restrictions on house buying, in line with a central bank seminar held on May 12, during which the bank requested that banks meet the mortgage demands of first-time house buyers with reasonable mortgage rates and approve qualified personal mortgages, the website of the state-run China News Agency reports.
The central bank move has been seen by some industry insiders as another measure by the government to rescue the market, the report said.
Zhang Hongwei, research director of Shanghai-based property consultancy ToSpur, expects the current situation of tight credit to gradually improve in the second half of the year, following the central bank's request to support demand from first-time house buyers. Other insiders said the tightening of mortgage offers won't change in the short term, however, because although banks support the policy superficially, they have largely reduced mortgage offerings or have stopped them altogether due to the lack of profit to be made on them.
Since March, most banks have been tightening mortgage offerings by cancelling preferential mortgage rates or adopting more caution in approving mortgages. According to statistics, banks have stopped giving discounts for mortgages almost completely, compared with discounts of 10%-15% previously.
After the central bank published its guidelines, banks emerged to revise rules to follow the central bank requests. Ping An Bank said on May 12 that it will support the financing demand for owner-occupied home buyers, and adjust its mortgage policy accordingly.
Quite a few media outlets interpreted the central bank move as a way to rescue the market. According to statistics, in the first four months of this year, the nation's property area sold and total sales both fell largely from a year earlier, triggering anticipation in the industry for a government boost to revive confidence in the property market.
Some analysts, however, including Shanghai Zhongyuan Real Estate Research advisory senior fellow Lu Wenxi, didn't see the central bank move as a way to rescue the market, because its opinion didn't reverse the government's policy to contain the property prices.
For owner-occupied home buyers, the recent development no doubt has seen a series of bullish factors, including rising price cuts in properties, eased restrictions on house buying, and banks' rising support for first-time home buyers, the report said.
Zhang Hongwei 張宏偉
Lu Wenxi 盧文曦