Curbing risks, ensuring timely delivery, reassuring homeowners highlighted

Market entities and regulators should handle homebuyers' threats to halt mortgage payments on unfinished projects in a steady manner and strongly push forward the work of ensuring timely deliveries of presold homes, said a quarterly report recently issued by the National Institution for Finance & Development.

In the first half, the central government kept sending positive signals that China is fine-tuning housing regulatory policies to stabilize market expectations and mitigate default risks faced by Chinese property developers. It required local governments to give a vigorous boost to the efforts to ensure timely deliveries of presold homes and safeguard people's livelihoods, the report said.

Thanks to the impact of a positive housing policy environment, the real estate finance situation improved marginally in China in the first half. The average mortgage interest rate nationwide for first-time homebuyers kept falling during the period. The figure was around 4.4 percent at the end of the first half, 5 basis points lower than the then over-five-year loan prime rate, a market-based benchmark lending rate, the report said.

Earlier this month, an official of the China Banking and Insurance Regulatory Commission said under the orderly management of local governments who are tasked with seeing that responsibilities are fulfilled by all stakeholders, the CBIRC will guide banks to take an active part in finding real estate funding solutions, grant credit to qualified home developers, and take various measures to promote actions ensuring timely deliveries of presold homes.

The official said that in the next stage, the CBIRC will effectively satisfy reasonable financing needs of real estate companies, give substantial support to the construction of rental homes, support mergers, acquisitions and the restructuring of housing projects, and better meet the rigid and upgraded demand for housing with a focus on new urbanites and young people living in cities and towns.

The regulator defined new urbanites as people who live in a city permanently but have not yet obtained a local hukou, or those who obtained a local hukou within the past three years.

Yao Hong, vice-president of the Postal Savings Bank of China, said the large State-owned commercial lender will grasp the opportunities brought by China's strategies to promote rural revitalization, a new type of urbanization and regional development, as well as step up support for new urbanites' borrowing needs for home purchases.

PSBC will continuously maintain close communication with relevant government departments and real estate developers to promote the resumption of work and production of stalled housing projects. In addition, the bank will continue to allow customers with COVID-19-related repayment difficulties to defer repayments on mortgage loan principal and interest, Yao said at a news conference announcing the bank's 2022 interim results on Tuesday.

The overall risk of PSBC's mortgage loans remains controllable, she said. Last month, the bank announced that the balance of its mortgage loans exceeded 2 trillion yuan ($291.69 billion), of which the balance of overdue loans related to stalled housing projects was only a tiny proportion at 127 million yuan.

Ping An Bank, a national joint-stock commercial lender based in Shenzhen, Guangdong province, said recently it will focus on supporting the development and operations of government-subsidized housing and rental housing as well as M&As of real estate projects that are in line with China's housing policy orientation.

The bank will actively participate in the underwriting of and investment in bonds issued to finance real estate company M&A deals. At the same time, it will continuously strengthen risk management of corporate real estate loans to realize all-around monitoring of customer operations, project schedules, asset status and the flow of money, said Ping An Bank's 2022 interim results report.

China Merchants Bank, another national joint-stock commercial lender, also said it will strengthen the forward-looking forecast of the real estate risk situation and continue to adjust the structure of real estate customers, regions, businesses and products while focusing on key cities and strategic customers.