China’s home mortgage rates in major cities fell further in November, waiting time for loan approval shortened for first time since April

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Average home mortgage rate for first-time home buyers in China’s 100 major cities declined to 5.69% in November, down by 4 basis point from the previous month, according to data from Beike Research Institute on Monday.

Average home mortgage rate for second-home buyers fell to 5.96%, down by 3 basis points from October, showed the data.

Average waiting time for home mortgage loan approval was 68 days in November, five days shorter than the previous month and shortening for the first time since April this year, according to Beike.

“Home mortgage rates in major cities declined in October for the first time this year and fell further last month, indicating continued improvement in housing market financing. Average waiting time for home mortgage loan approval shortened for the first time since April this year, indicating banks’ lending to the sector is stepping up and reasonable funding needs in the real estate sector are being met,” said Xu Xiaole, chief analyst at Beike Research Institute.

“That will help improve housing market expectations and home market transactions to bottom out,” said Xu.

Among the 100 major cities, about 30% of them saw home mortgage rates decline in November, more than the previous month, showed the data. The cities are mostly in the Yangtze River Delta region, such as Jiaxing, Yancheng, Huzhou, Nantong, Jinhua, Shaoxing, as well as cities in the Guangdong-Hong Kong-Macau Greater Bay Area such as Dongguan, Foshan, Huizhou and Zhongshan.

More than 60% of the 100 major cities recorded shorter waiting time for home mortgage loan approval in November than the prior month and in particular, waiting time shortened by more than 20 days in the cities such as Liuzhou, Nantong and Beihai.

Chinese authorities have repeatedly urged financial institutions to ensure that reasonable fundings needs of real estate developers and home buyers are met and to prevent a one-size-fit-all approach for real estate-related lending.

At the end of September, the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) held a special meeting about real estate financing, guiding major banks to accurately grasp and implement the real estate financing policies, maintain stable and orderly lending to the real estate sector and safeguard steady and healthy development of the real estate market.

Official data had also shown that financial institutions’ lending to the real estate sector picked up in October. By the end of October, banking institutions’ outstanding home mortgage loans stood at 37.7 trillion yuan by the end of October, rising by 348.1 billion yuan from the previous month, which is 101.3 billion yuan more than the increase in September, according to data from the PBOC.

However, current home mortgage rates in some cities are still high and waiting time for home mortgage loan approval is still more than four months, leaving room for further improvement in coming month, said Xu.

He expects home mortgage rates to decline further next month and waiting time to continue shortening before home mortgage loan supply/demand become normal next year.

While home mortgage loans from banks are easing slightly, it takes more time for the improvement in financing end to housing transactions, said Chen Wenjing, analyst at China Index Academy, adding that due to restrictions on banks’ lending to the real estate sector, the room for financing relaxation will be limited.