PBC Improves Financial Services for Real Estate Sector
OREANDA-NEWS. October 27, 2014. The Notice are released on the following matters in order to further improve financial services for government subsidized housing projects, continue to support the reasonable home buying demand of the household sector, and promote the sustainable development of the real estate market:
1. Stepping up Financial Support for Government Subsidized Housing Projects
Banking financial institutions are encouraged to follow the principle of keeping risks within controllable ranges and maintaining sustainable financial standing, continue to support the shanty town transformation and government subsidized housing projects that meet credit standards. The maturity of loans to public rent housing projects and shanty town transformation projects can be extended to up to 25 years. Development finance will play a larger role in supporting shanty town renovation. The comprehensive arrangements and planning of local governments in providing resettlement homes for residents in shanty town transformation projects and the construction of public rent homes and ordinary commercial housing will be included in the coverage of development finance to improve the efficiency of fund use.
2. Supporting the Reasonable Mortgage Loan Demand of the Household Sector
For a family that borrows to buy the first ordinary home for its own use, a minimum down payment ratio of mortgage loan is 30 percent and the floor loan interest rate is 70 percent of the benchmark interest rate, and the specific terms shall be decided by the banking financial institution that provides the loan based on the risk profile of the borrower. When a family that owns a home and has paid off the mortgage loan applies for a mortgage loan to buy another ordinary commercial home to improve the living conditions, the bank may apply the first home mortgage loan policy. In cities that have lifted home buying restrictions on residents or those that have not imposed such restrictions, when a family that owns 2 homes or more and has paid off all the mortgage loans applies for a mortgage loan to buy another home, the bank shall make prudent decisions, after considering the solvency, credit standing of the borrower and other factors, on the down payment ratio and loan interest rate. In view of the local urbanization plan, banks may provide mortgage loans to non-local residents that meet the conditions required by the related policies.
Banks shall reduce the period required for loan approval, offer reasonable loan interest rates, give priority to the households that borrow to buy ordinary housing as their first home or to improve living conditions, and satisfy their credit demand.
3. Enhancing the Capacity of Financial Institutions to Provide Mortgage Loans
Banks are encouraged to raise fund by issuing mortgage-backed securities and special financial bonds with long maturities earmarked for mortgage lending to first time home buyers and those buyers who buy ordinary housing to improve their living conditions after purchasing their first home.
4. Continuing to Support the Reasonable Financing Demand of Real Estate Developers
Banking financial institutions should, under the premise of risk prevention, rationally allocate their credit resources, actively support those real estate developers with certified qualifications, record of sound operation and good credit standing to develop and build ordinary commercial housing, and meet the financing demand of on-going or follow-up housing projects with good market prospect. The market-based financing channels will be broadened, and eligible real estate developers will be encouraged to issue debt-financing instruments in the interbank bond market. The pilot program of Real Estate Investment Trusts (REITs) will be conducted on a prudential and active basis.
Branch offices of the PBC and the CBRC should, in accordance with specific situations in their jurisdictions and local governments’ regulation requirements, support local banking financial institutions to reasonably manage the credit policy for various categories of housing loans so as to promote the sustainable and healthy development of local real estate market.
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