New Real Estate Lending in China in 2021 Expected to Remain on Par with 2020

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China’s new real estate lending in 2021 is expected to remain on the same level as last year amidst efforts to moderate growth by central government regulators.

Wang Yifeng (王一峰), chief financial analyst with Everbright Securities, said to state-owned media that the mortgage loan growth for all Chinese financial institutions in 2021 is expected to be around 4.5 trillion yuan, while real estate loans are expected to grow by approximately 1.5 trillion yuan – figures which are both roughly in line with the readings for 2020.

The Chinese central bank recently flagged further efforts to contain real estate financing in 2021, with a meeting of its Shanghai office earlier this week calling for “stable implementation of the regulation of the concentration of real estate loans, and rational control of the scope of real estate loans.”

On 1 January 2021 the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) officially launched the “banking sector financial institution real estate loan concentration management system” (银行业金融机构房地产贷款集中度管理制度).

Under the system the “real estate loan concentration” of Chinese banks – defined as the real estate lending balance and personal home mortgage balance as a share of all renminbi lending by a bank, will need to satisfy requirements set by PBOC and CBIRC.

Dong Ximiao (董希淼), researcher at the Financial Research Institute of Fudan University, said that strengthening the regulation of real estate lending ratios was consistent with China’s policy theme that “houses are for occupation, not speculation” and would help to further drive financial resources towards micro and small enterprises, the manufacturing sector and green development.

As of the end of September 2020 the real estate loan balance of Chian’s main financial institutions was 48.8 trillion yuan, for YoY growth of 12.8%. Real estate loans accounted for 28.8% of all lending.

The personal home loan balance stood at 33.7 trillion yuan, for YoY growth of 15.6%, while the real estate development loan balance was 9.3 trillion yuan, for YoY growth of 11.4%.

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