The latest data from Rong 360 indicates that China’s average first home loan rate lifted to 5.22% in September, for its ninth increase since the start of 2017.
According to Rong 360 the average first home loan rate for September was 1.06 times the benchmark, and marks an increase of 2.01% compared to the preceding month, with the pace of growth now easing.
The September first home loan rate of 5.22% marks a 17.66% year-on-year increase compared to the rate of 4.44% for the same period last year.
The ten cities across China with lowest average first home loan rates were Shanghai (4.89%), the Fujian province capital of Xiamen (4.99%), Dalian (5.03%), Dongguan (5.06%), Xi’an (5.08%), Kunming (5.10%), Urumqi (5.11%), Shenyang (5.13%), Chengdu (5.15%) and Taiyuan (5.15%).
Out of the 533 banks across 35 cities in China covered by Rong360, a total of 137 raised their first home loan rates, accounting for 25.70% of the total, while only 13 cut rates, comprising 2.44%.
The average rate for pre-owned homes loans in September was 5.60%, holding roughly steady with the preceding month, and rising approximately 3% compared to the rate of 5.39% for the same period last year.
Rong360 analyst Li Wanfu (李万赋) said to Economic Observer that since interest rate reductions in 2014, Chinese banks had adjusted their asset structure due to the impact of asset scarcity and non-performing loans.
Many banks evinced a preference for residential property loans and provided lower rates or discounts, leading to a marked expansion in the supply of housing credit.
As a result of the central government’s deleveraging campaign, however, liquidity has tightened, the debt costs for banks have increased, and returns on assets have fallen, putting both revenues and profits under pressure.
These circumstances, in tandem with government restrictions on the extension of credit to certain sectors, have forced banks to raise their lending rates.
Rong360 analyst Li Weiyi (李唯一) said that first home loan rates may now be approaching a peak, however, with the rate increase already slowing in september.
According to Li first and second-tier cities have already completed their upward adjustment of first home loan rates, and there is little likelihood of further major changes in future.