Beijing Credit Tightening Equivalent to 4 Rate Hikes, Trust Market Shrinks
Beijing has the tightest mortgage lending policies. The first-home interest rate is 1.1x benchmark. Some banks in Shanghai still offer 5% discounts, Shenzhen 3-5%, the four big banks in Guangzhou offer the benchmark rate. A second-home is 1.2x benchmark in Beijing, 1.1x in the rest of the first-tier. Beijing homebuyers can’t borrow for more than 25 years, versus 30 elsewhere.
Beijing’s credit tightening is equivalent to 4 rate hikes:
From 4.41% to 5.39%, the interest rate rose 0.98%. The central bank to raise interest rates, the usual rate hike is 0.25 percentage points. In other words, from early May to early June, just a month to the time, the Beijing property market has raised interest rates twice, equivalent to four central bank “standard intensity” rate hikes!
Another article saying unless you’re prepared to pay higher interest rates, be prepared to wait for your mortgage. The exceptions are for HNW customers and if the developer of the property is also a customer of the bank.
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Finally, the trust market has evaporated as a source of funding for real estate.
According to Wind statistics, in the first 5 months of this year there were a total of 103 trusts issued, the last 5 months of last year saw 185, down 82; the first 5 months of this year issued a total of 19.8 billion yuan, the last 5 months of last year issued 52.5 billion yuan, a decline of 32.7 billion yuan. New real estate trust projects in the new trust products also significantly decreased.
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