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More People Buy Houses on Loans
China's individual domestic mortgage business is booming because of the country's housing reform policy to privatize its housing sector.
China Construction Bank (CCB), one of the four State-owned commercial banks, said it was owed 129.3 billion yuan (US$15.6 billion) in domestic mortgages by the end of July, an increase of 43 billion yuan (US$5.2 billion) from the beginning of the year.
The Industrial and Commercial Bank of China (ICBC), the largest State-owned commercial bank, said its outstanding individual housing loans had reached 74.4 billion yuan (US$8.9 billion) by the end of August, an increase of 33.2 billion yuan (US$4.0 billion) from the start of the year.
The central government's decision to privatize the country's housing sector has thrown a lot of urban people onto the housing market.
"People cannot wait any longer for government-assigned new housing, they want to improve their living standards through buying larger homes,'' said an expert with the State Information Centre, who gave his name as Gong.
He added that many of these people could still not afford to buy larger homes outright and needed help from commercial banks, however.Chinese commercial banks had become more active mortgage providers because they had identified this need for housing loans as a major source of profit in the years ahead, he said.
"All commercial banks have emphasized the importance of developing the individual housing loan business,'' he said.
China Construction Bank said it would increase the amount of domestic mortgages to between 20 per cent and 25 per cent of the bank's loans business in the next five years, from the current 8.3 per cent.
The Industrial and Commercial Bank of China said it would raise its home loans business to 15 per cent of the bank's total by 2005.
China Construction Bank, whose individual housing loans account for more than 50 per cent of the country's total, has mapped out a detailed plan for developing its mortgage business at a provincial level, and put its branches into three categories based on a particular area's market.
Where demand is vigorous and business relatively mature, home loans will be increased to between 20 and 25 per cent of the bank's total lending in three years and to 30 per cent within five.
The CCB headquarters will give preferential policies to these banks when arranging loans.
In the second category, where the market has good potential, the aim is to increase the banks' mortgage business to between 20 and 25 per cent of total lending within five years.
Where demand is insufficient, home loans business should be increased by three to five per cent within five years.
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