(Bloomberg) – China’s home loan growth has slowed to the lowest pace in more than two decades due to the continued housing market slump caused by developer defaults, virus lockdowns and low consumer confidence .
Outstanding loans in the real estate sector rose 6% to 53.2 trillion yuan ($8 trillion) at the end of March from a year ago, the slowest pace of expansion since the start data in 2009, according to a statement issued Friday by the People’s Bank of China. . The growth rate is down from 7.9% at the end of 2021.
Resident mortgage loans rose 8.9% to 38.8 trillion yuan from a year ago, a slowdown from the 11.3% increase at the end of last year, while outstanding property development loans increased after falling for three consecutive quarters.
China’s home sales slump deepened in April, with preliminary data from the China Real Estate Information Corp showing a nearly 60% drop in sales from the top 100 developers. The drop came with major cities such as Shanghai and Changchun under lockdown, and consumers stayed away even as shopping restrictions were eased in more than 60 cities.
The average interest rate on new mortgages offered in March was 5.42%, down 17 basis points since the start of the year, the PBOC said in the statement. The drop comes after the five-year prime rate, which is a benchmark for the interest rate of many home loans, was cut to 4.6% in January.
The continued slowdown in the sector prompted the central bank to bolster support for several struggling developers by easing lending restrictions to ease a cash crunch last month, Bloomberg reported. It comes after the central bank called on banks to increase home lending in the first quarter.
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