Financial authorities recently issued a management system for the concentration of real estate loans in banking financial institutions, setting “two red lines” for the proportion of the balance of real estate loans and the proportion of the balance of personal housing loans in different types and sizes of banking institutions. The former range from 40% to 12.5%, while the latter range from 32.5% to 7.5% Why the move The People’s Bank of China and the Banking and Insurance Regulatory Commission made it clear that they should improve the resilience and robustness of the financial system and promote the steady and healthy development of the real estate market. We will improve the credit structure, support financing in key areas of economic and social development such as manufacturing and science and technology, and in weak links such as small and micro businesses, agriculture, rural areas, and farmers, and promote balanced development of the finance and real estate sector with the real economy In recent years, the implementation of China’s real estate long-term mechanism has achieved significant results, and the growth rate of real estate loans has steadily dropped. As of the end of the third quarter of 2020, China’s RMB real estate loan balance increased by 12.8% year on year, the growth rate fell for 26 consecutive months.
Nevertheless, in the view of the regulatory authorities, it is still necessary to further enhance the ability of banking financial institutions to resist the fluctuations of the real estate market, prevent the potential systemic risks brought about by the excessive concentration of real estate loans in the financial system, and improve the soundness of banking financial institutions For financial chief researcher Dong Ximiao, real estate loan concentration management system is an important content of strengthening macro-prudential management, it helps to further reduce the real estate financial risks, and help to push further into the small micro-enterprise financial resources, manufacturing and green development for national economic and social development in key areas and weak links In the case of limited financial resources, avoid the real estate industry “siphon effect”.
For a long time, the real estate sector attracted large capital inflows and was deeply “tied” to the financial sector. In recent years, the regulatory authorities have repeatedly ordered the control of real estate loans. Although the growth rate has slowed down, the total amount is still large, accounting for a high proportion “At present, China’s property-related loans account for 39 percent of banking loans, and a large number of bonds, equity, trust, and other funds have entered the real estate sector. It can be said that the real estate industry is the biggest ‘grey rhinoceros’ in terms of financial risks in China at this stage.”People’s Bank of China Party committee secretary, China Banking and Insurance Regulatory Commission Chairman Guo Shuqing wrote In August 2020, the People’s Bank of China and the Ministry of Housing and Urban-Rural Development formed the capital monitoring and financing management rules for key real estate enterprises to manage the capital demand side. The “two red lines” formulated this time mainly start from the supply side of the capital, the overall proportion of real estate loans and personal housing loans at the same time to restrict the ratio of a wider range of coverage. The real estate financing “floodgates” are tightening in all respects.
Reprint indicated source：Spark Global Limited information