2017-02-08

Small Shanghai Banks Encouraging Mortgage Borrowers to Repay Early

That was fast. A year ago China was in the middle of a roaring housing bubble, one that was starting to spread into second-tier cities. Credit growth was strong as well, but mortgage lending made up a large amount of credit growth, more than 100 percent in July. Fast forward to today. After about 4 months of intensifying buying and credit restrictions, plus a Spring Festival bookended by rate hikes, credit conditions have gone from loose to very tight. So tight that some Chinese banks are encouraging borrowers to repay their debt ahead of schedule.

iFeng: 一二线城市房贷全面收紧 有银行鼓励提前还款
Under the control of the real estate industry in 2017, the financial environment to tighten the trend has been significant trend. Reporters learned that recently small and medium-sized commercial banks in Shanghai to ease the balance of housing loan pressure to require sub-branches to encourage mortgage customers in advance of repayment, and even advance payment of relief money to give concessions. In addition, Beijing, Shanghai, the two first-tier cities are currently less than 9% off housing loan interest rates have been extinct, there are commercial banks will be less than 95% discount mortgage interest rate approval power all reverted to the branch level, you want to get 9 Discount interest rates more difficult. There are indications that the property market in 2017 the financial environment or will no longer be relaxed.

According to report, small and medium commercial banks in Shanghai in order to ease the mortgage balance of pressure, at the end of January issued a "mortgage on the end of the emergency pressure on the balance of the notice," asked the branch, the business department as soon as possible repayment of existing housing loans repayment ahead of schedule Demand for the mortgage has been applied for early repayment and early intention to apply for early repayment of the customer, asked the branch to proactively contact customers, as soon as possible to complete the repayment operation, and part of the advance repayment to customers free of charge penalties preferential policies to guide Customers use idle funds for part of the early repayment.

"Although this initiative to encourage early repayment of mortgage customers is still only individual banks stage of window guidance, but small and medium-sized banks housing loans tight is a common phenomenon." Shanghai Centaline Property Market analyst Lu Wenxi told reporters in Shanghai mortgage Large state-owned banks have not seen such a situation, but a number of small and medium-sized commercial banks have reflected the tight mortgage balance, and only in residential real estate loans, commercial real estate is not affected. Beijing and Shanghai from the two large real estate intermediary agencies to reflect the situation, the current housing loans to banks lending pace is generally slowed down.

"Although this initiative to encourage early repayment of mortgage customers is still only individual banks stage of window guidance, but small and medium-sized banks housing loans tight is a common phenomenon." Shanghai Centaline Property Market analyst Lu Wenxi told reporters in Shanghai mortgage Large state-owned banks have not seen such a situation, but a number of small and medium-sized commercial banks have reflected the tight mortgage balance, and only in residential real estate loans, commercial real estate is not affected. Beijing and Shanghai from the two large real estate intermediary agencies to reflect the situation, the current housing loans to banks lending pace is generally slowed down.
The article also discussed the extinction of the 10 percent mortgage discount in the top-tier cities.
Beijing, Shanghai, Guangzhou is currently less than 10% discount housing loans preferential interest rate has been completely extinct, there are commercial banks will be less than 95% discount mortgage interest rate approval power all reverted to the branch level, you want to get 10% Interest rates are harder. Second-tier cities in a few years after the bank raised the first mortgage interest rates, such as Qingdao, Dalian, Zhuhai and other places of the bank interest rate discount from 85 fold to 9 fold. There are indications that the property market in 2017 the financial environment or will no longer be relaxed.
The central bank is walking a thin line: 央行利率新措施出炉 严厉举措透露出一大信号
Fed rate hike in March this year, the probability is not high, from the real estate, stock market, the bubble is being gradually squeezed. The central bank so quickly to tighten the monetary direct fuse is what? Is to control the financial high leverage.

Central Bank to see the data, so that the central bank had to raise the interest rate corridor - in January the loan is too much, State Securities February 8 research report that the "early lending early earnings" and the end of 2016 part of the credit demand extension After the impact of commercial banks is expected to add 2.8 trillion yuan in January credit, social financial 3.6 trillion yuan, seasonal high growth, the latter with the central bank to raise money market interest rates to strengthen the MPA assessment and other multi-caliber regulation and slowdown in real estate sales, Credit expansion is expected to come down. Before the Spring Festival put so much money, the central bank after the Spring Festival must be recovered as soon as possible.

If not recovered, the consequences are serious. Financial institutions to get the money in hand, and no good project lending, will enter the virtual economy through various channels, or the use of highly leveraged gloves wolves-style equity acquisition, or to enter the real estate market so that mortgages soar, Or like the first half of 2015, like in the back support the stock secondary market.

Even more frightening is that some local banks are likely to put a lot of money behind the stealth shareholders, so that these capital predators in the market turn the clock over and over again, who wants to make money who make a fortune.

February 7 of the "China Securities Journal" published an article some truth. The article argues that the financial deleveraging has become the most important macro-control, while ensuring the liquidity of basic and reasonable demand, the central bank through the delivery of "short money" and "money" to suppress leveraged arbitrage, term arbitrage operating orientation will not change.

...To prevent the beginning of crazy lending, to prevent funds disguised into the stock and real estate market, is the fuse of the central bank attack. Long-term reasons, it is to deal with capital outflows, to prevent the Federal Reserve to raise interest rates to prevent inflationary pressures caused by rising PPI.

From the second half of last year to raise capital costs, so that various industries in the warm water to gradually adapt to high-interest environment, so as not to raise interest rates when the real rush. But it needs to be emphasized that the central bank will certainly go to leverage while maintaining overall market stability.
Policymakers believe credit will flow into the "real" economy if they choke off all other avenues, but every time they've tightened, the economy slows. The private sector either doesn't want to borrow or banks don't want to lend to the higher risk businesses. Policymakers panic, open the spigots, force SOEs to borrow and watch the private sector speculate on bonds, stocks, housing, or take the money out of the country. China's GDP growth is part of a magic act, misdirection to give an air of stability while the economy swings from hot to cold and back again at an ever increasing pace.

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