A few days ago, the Shenzhen Housing Authority released the reference price of 3595 residential blocks in Shenzhen as a reference price for second-hand housing transactions in Shenzhen. At that Time, we analyzed that this reference price is not forced, and the actual transaction price in the market is still what it is, but this reference price may become a reference for banks to lend, which will significantly compress banks’ mortgage funds, thus significantly increasing the down payment for Home buyers and suppressing the housing price.
For example, a set of 82 square meters of 2 rooms in Shenzhen China Resources City, the real market transaction price is 15 million, the original down payment is 30%, 4.5 million, the bank can lend 10.5 million, but the government guide price to the pricing of this community is only 10.82 million, if the bank according to this price to assess, it can only lend 7.57 million, that is to say, the actual down payment from the original 4.5 million, raised to 7.43 This means that the actual down payment has to be raised from the original 4.5 million to 7.43 million, which is 2.93 million more than the original. In this way, the first set is not a down payment of 30%, directly into the 50%. This move is to the Shenzhen property market to reduce leverage, to combat speculation of a heavy punch.
Shenzhen Everbright Bank has issued an internal letter requesting that the second-hand house transaction prices released by the Shenzhen Housing Authority be used as a reference basis for mortgage loans
If all banks in Shenzhen issue loans with this government-issued reference price as a guideline, raising from a 30% down payment to a 50% down payment, many home buyers, whether just in need or speculative, will be stopped at the door. And as recently as February 22, Shenzhen’s Everbright Bank has been issuing bank loans in accordance with this reference price. It has formed a new hot event in the country. Let’s look at the details.
Recently, the Shenzhen branch of Everbright Bank has issued a document internally, saying that according to the Shenzhen Housing Authority and regulatory requirements, the reference price of second-hand house transactions issued by the Housing Authority will be used as a reference basis for mortgage loans. The document says according to the Shenzhen Housing Authority and regulatory requirements, which means that the Shenzhen government is not just asking Everbright Bank to do so, but should have requirements for all other banks. It is expected that after the notice is issued, other banks in Shenzhen may follow suit, and it may only be a matter of time before the reference price is implemented in the banks. After all, banks also want to control their own lending risks.
This means that the property market in Shenzhen may usher in the biggest impact in the past few years, such an impact will not be less than the collection of real estate tax.
At the same time, individuals who have recently applied for a home loan will also be scrutinized by banks when applying for business loans. The prudent granting of personal business loans to customers who have recently applied for personal home mortgage loans or purchased homes has been pushed out simultaneously by banks in North, Guangzhou and Shenzhen.
Recently, after the regulation of the first-tier cities such as North, Guangzhou and Shenzhen made a heavy voice to strictly investigate the irregularity of “consumer loans” and “business loans” into the property market, some banks in these first-tier cities raised the threshold of business loans, and some joint-stock banks also raised the interest rate of business loans. Most of the banks have further strengthened their loan auditing efforts.
Now the housing prices in many first-tier cities and hot second-tier cities are all leveraged to pry the market, with various business loans and mortgages. In the case of tightened mortgage loans, many people use business loans, or even credit card cash to fill the hole in the purchase funds, and some people even use business loans to cash out the down payment. Therefore, this tightening of credit loans and consumer loans in major cities across the country can be said to be the two most important moves by Chinese banks to tighten mortgage funding since the end of last year, playing the role of the bottom of the barrel. The hot housing prices in many first and second tier cities may stop here.
When it comes to tightening mortgages, the big killer, the topic that can’t be avoided is the real estate concentration management policy introduced by the central bank on the last day of last year, which set specific figures and proportional red lines for the issuance of mortgages to major banks, and Guangzhou was the first city to start tightening the issuance of mortgages.
After several banks in Guangzhou stopped issuing mortgages before, news of mortgage price hike was spread by the four state-owned banks, Guangzhou Industrial, Agricultural, Chinese and Construction, and several banks followed up. Postbank, Pudong Development Bank, Everbright Bank and CITIC Bank all said that price adjustments are in progress. Mainly because the Guangzhou property market is hot, too much demand for housing loans, the quota is not enough, the bank mortgage ratio has exceeded or will exceed the red line. To not stop lending, or raise interest rates, before crossing the line to earn a little more is a little.
Guangzhou, Dongguan, Shenzhen, Foshan, Zhuhai’s property market, in 2020 are hot. At a time when property market sales in central, northeastern and western China are down year-on-year in 2019, Guangzhou’s 2020 property market sales are up 29% year-on-year, Shenzhen is up 24% year-on-year and Dongguan is up 32% year-on-year. This means that the trend of funds from the north going south to speculate on housing has not changed. The net red city of Hangzhou is only a year-on-year growth of 3%, Chongqing, Wuhan are down 21% year-on-year.
Guangzhou is only the first shot, other cities will certainly spread and follow, because, many banks have red line, there is no quota. Nanjing and Chengdu, will soon also see interest rates rise and lines tighten. Chengdu Bank, Zhengzhou Bank, Zhongyuan Bank, Bank of Qingdao, Xiamen Bank, Industrial Bank, China Merchants Bank is definitely no quota at all, and is definitely refusing to issue loans or raise the threshold, politely refused. And Postbank, Construction Bank of personal mortgage is also over the line, there is also no quota, but also to raise interest rates and tighten the approval, you need to buy a house mortgage can consider changing banks.
In 2021, monetary policy returned to normal, tight property market credit, this is the general tone, basically will not change, do not take a chance. 2021 February 18, the People’s Bank of China to carry out 200 billion yuan medium-term lending facility operations and 20 billion yuan reverse repurchase operations, the net repossession of funds 260 billion, resulting in China’s stock market opened low, a substantial set of people, which may be the liquidity funds tightening generated by The panic effect.
China’s central bank will soon announce the February LPR rate, this interest rate market is expected to remain unchanged, later as Inflation expectations may continue to move higher, of course, does not exclude the central bank to raise the LPR rate. Home slaves have completed the conversion in August last year, if suddenly told that the interest rate has increased, to pay back the amount of mortgage will also be substantially higher! At that time, I was always suggesting that people choose a fixed rate, I wonder how many people listened to it.
The property market is a capital-intensive market, there is no credit easing, expect to reproduce the same crazy rise as the southern cities last year, has been impossible. And whether banks in Shenzhen began to issue mortgages at government reference prices, or tighten business loans and consumer loans in the north, or say, Guangdong and other local banks to raise bank mortgage rates, so to speak, are the bottom of the barrel action for the property market. This is actually one of the biggest black swans in the Chinese property market!
And once the flip mortgage is stuck tight, the volume of China’s property market will certainly shrink significantly this year. This means that a large number of developers will sell their properties at a reduced price to survive, but of course, living is not for them to say!