Original title: Economic observation: China’s central bank comprehensively cuts the real estate sector should mainly benefit
China News Agency, Beijing, November 25 The People’s Bank of China lowered the RRR for the second time this year What does this mean for the real estate market?
On the 25th, the People’s Bank of China said it had decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on December 5, 2022 (excluding financial institutions that implemented a deposit reserve ratio of 5 %). The RRR cut released a total of about 500 billion yuan of long-term funds (RMB, same below).
The housing market will be one of the main beneficiaries of the accommodative monetary policy. Wen Bin, chief economist of China Minsheng Bank, pointed out that judging by the deployment of the 23rd State Council executive meeting and the 16 financial measures passed by the two departments to support the stable and healthy development of the real estate market (hereinafter referred to as ” financial measures 16″), the epidemic severely affected industries and small, medium and micro enterprises, infrastructure, manufacturing, real estate, equipment renewal, etc. will be important areas of credit support.
Since the second half of last year, China’s real estate sector has been in a recession and market expectations have weakened. Liu Lijie, a market analyst at the Shell Research Institute, said the “16 financial measures” policy support was recently introduced. This RRR cut will provide ammunition to increase credit support in the housing market, help improve market expectations and accelerate the housing market downturn.
Recently, several regulatory authorities in China have successively released positive signals to provide more financial support to real estate companies and home buyers. Individual home loan interest rates and down payment rates have been continuously lowered, 200 billion yuan of “secured housing” special loans, the “second arrow” (bond financing support instruments for private enterprises) have been introduced ) has been deferred and expanded, and regulators have also clearly supported stock development loans and trust loans. The financing is reasonably extended on the premise of guaranteeing the security of the creditor’s rights.
The implementation of these policies is accelerating. According to Huatai Securities statistics, from 23 to 24, a number of representative real estate companies received intentional credit lines from commercial banks, totaling more than 1.27 trillion yuan. The “Second Arrow” financing plan has also been implemented frequently: since November 10, the registered issue amount of the shelf has reached 93 billion yuan, and the new credit-enhancing bond issue amount has reached 4, 7 billion yuan.
In this context, how does this RRR cut affect the real estate market? Chen Wenjing, director of market research at the index department of the China Central Index Research Institute, explained that cutting the RRR can increase the long-term stable funding sources of financial institutions, improve the ability of financial institutions to allocate funds and, at the same time, reduce the cost of funds of financial institutions. Transmission through financial institutions can promote the reduction of the overall costs of financing the real economy. The release of more capital liquidity from this RRR cut will also aid the outflow of real estate-related funds.
Wang Xiaoqiang, chief analyst at the Zhuge Housing Data Research Center, also pointed out that the RRR cut is urgently needed and will play an important role in the real estate sector. RRR cuts can free up more liquidity, which also sets the stage for banks to support reasonable funding for private real estate companies. On the other hand, in view of the fact that the recovery of real estate market fundamentals is lower than expected, the RRR cut is expected to provide more financial support to the real estate market, which will help the real estate market recover. existing funds and other industry foundations.
In addition to injecting confidence into the real estate market and releasing more liquidity, Liu Lijie said that after the RRR cut, the possibility of a correction of the LPR (Loan Quoted Rate) with a period of more than 5 years, which is the “anchor” of the mortgage interest rate, increases, i.e. the mortgage interest rate The lower bound should again accommodate the general decline. Currently, home and second home mortgage interest rates in most cities are at the lower end of the policy. According to statistics from the Shell Research Institute, as of Nov. 18, current interest rates on home loans in 18 cities have dropped to “3 prefixes” (less than 4%).
Liu Lijie pointed out that the “16 Financial Articles” clearly mentioned that “local policies can reasonably determine the lower limit of local individual home loan advance and loan interest rate policies on the basis of national policies.” such as lowering the down payment for home purchase and easing the criteria for identifying the first home, etc., which will help free up the demand for rigid and upgraded housing.
Looking ahead, Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, believes there are many positive signs for real estate funds in the near future. Whether it is guaranteed delivery of buildings, reasonable financing by real estate companies or residential mortgage loans, bank lending sentiment is expected to improve significantly by this year, thereby stabilizing real estate fundamentals on both sides. the ends of supply and demand, and promoting the bottoming of the real estate sector. (Reporter Pang Wuji)
(Editor in charge: He Xin)
