Mortgage lending is tightening in China as property control policies continue to take effect, and multiple banks claim their loan quotas for the year have already been exhausted.
Over 90% of banks say that they are facing the problem of tight lending quotas according to survey data from Rong 360, while loan approval times have increased from 15 – 60 day previously to between 60 and 180 days in present.
The property control policies launched over a year ago in a bid to contain overheating markets have had an especially strong impact in Beijing, where interest rates for first home loans have risen to 5 – 10% above the benchmark rate, and in some cases hit a 20% premium.
As of 25 October Beijing home loan rates have risen to an average of 5.28% according to Rong 360, with tightening loan quotas a key factor behind the increase.
Securities Daily reports that the full gamut of banking categories in Beijing are refusing to make mortgage loans, including commercial banks, big state-owned banks and municipal banks.
The Fengtai district branch of one Beijing joint-stock bank said that it could not make any new home loans due to exhaustion of lending quotas.
“We basically have no mortgage loan quotas, and have almost temporarily suspended mortgage lending operations,” said a bank representative.
The Chaoyang district branch of a big state-owned bank also indicated it could not provide any new mortgage loans because its quotas had been exhausted.
“This year the quota has been used up, and since we have already completed loan approvals, and will not be making any ore loans before the end of the year.”
The Dongcheng district branch of the same bank indicated that due to tightened quotas any mortgage applicants would need to join a waiting list, and that it would take around four months for loans to be made following approval.
The loan manager of the Chaoyang district branch of a Beijing municipal bank said to a Securities Daily reporter that “at present our quotas are used up, and other branches are the same,” before recommending that he pursue inquiries with other lenders.
According to the same loan manager, “customers whose have already had loans approved will need to wait up to eight months to obtain funds.”
Out of a total of 11 banks with which Securities Daily pursued inquiries, only two – a joint-stock commercial bank and a municipal bank, indicated that they had ample quotas left and would be open to mortgage loan applications, and able to provide loans before the end of the year.