ThePaper.cn:

The Central Economic Work Conference put forward actively and prudently defusing real estate risks and equally meeting the reasonable financing needs of real estate enterprises of different ownerships. What plans does the NFRA have for the real estate sector at present and what plans will be taken going forward? Thank you.

Xiao Yuanqi:

Thank you very much for your questions, which are of great concern and importance to the public and the NFRA. Recently, we have actively assisted industrial authorities and local governments to adopt a comprehensive approach on both supply and demand sides amid our efforts to step up financial support. The Ministry of Housing and Urban-Rural Development (MOHURD), the People's Bank of China (PBC), and the NFRA introduced the policy to recognize households with mortgage records but no local property ownership as first-time homebuyers, making them eligible for favorable down payments and mortgage rates. The PBC and the NFRA jointly released a set of 16-point financial measures to support the stable and sound development of the real estate market. They also studied and established a dynamic mechanism to adjust mortgage rates for first-time homebuyers, lowered the bottom line of mortgage rates for second-time homebuyers, and encouraged banks to lower the interest rates of outstanding loans for first-time homebuyers. All these policies and measures have delivered positive results in enhancing financial services in the real estate sector, satisfying the legitimate financing needs from the real estate market, and promoting the stable and sound development of the real estate market.

This January, the MOHURD and the NFRA jointly released a notice on establishing a financing coordination mechanism for the real estate sector at the city level. The notice urged cities at and above the prefecture level to set up a financing coordination mechanism for the real estate sector, establish a platform for facilitating communication between governments, banks, and enterprises, and promote coordination between real estate companies and financial institutions. 

We all know that the real estate sector entails a long industrial chain and covers a wide range of areas, thus playing an important role in the economy and people's lives. Therefore, the financial sector must endeavor to fulfill its responsibility to give strong support to the real estate sector. At present, banks finance the real estate sector mainly by the following means: First, by property developer loans and individual housing loans, also known as mortgage loans. To date, outstanding developer loans and individual housing loans stood at 12.3 trillion yuan ($1.72 trillion) and 38.3 trillion yuan, respectively. In 2023 alone, 3 trillion yuan in developer loans and 6.4 trillion yuan in housing mortgage loans were issued. That is to say, together, the banking sector provided nearly 10 trillion yuan in loans – a remarkable amount – to the real estate sector. Second, via banks' investment in bonds issued by real estate companies. At the end of last year, outstanding property developer bonds held by banks totaled 427.5 billion yuan. In 2023, banks invested heavily in such bonds, increasing 15% from a year earlier. In addition, banks' merger and acquisition loans and extensions for outstanding loans to real estate companies topped 1 trillion yuan in 2023.

We have actively cooperated with the MOHURD and the PBC, and provided financial support to ensure that overdue housing projects were completed and delivered. By the end of 2023, most of the 350 billion yuan worth of lending set aside for this special purpose had been delivered to such projects. Commercial banks have also provided funds to ensure the construction and delivery of presold projects.

The NFRA will guide financial institutions to make full use of existing support policies, continue to provide better financial services for the real estate market, maintain the stability of credit lines to the sector, meet legitimate financing needs, and make their contribution to promoting the stable and sound development of the real estate market. In the near future, we will focus on the following major work: 

First, we will accelerate the implementation of the financing coordination mechanism for the real estate sector at the city level to ensure it will produce effects. Under the mechanism led by municipal governments, a list of projects eligible for financing assistance will be provided on a just and fair footing to financial institutions within their respective administrative regions. All these are elucidated in the notice released by the NFRA and the MOHURD. Based on assessments of property projects using market-oriented and legal principles, financial institutions are expected to proactively meet the legitimate financing needs of projects that are making smooth progress and have sufficient collateral, reasonable liabilities, and guaranteed repayment sources. For projects that are experiencing temporary difficulties but maintaining a basic fund balance, financial institutions are expected to provide stronger support by extending outstanding loans, rescheduling repayments, and issuing additional loans rather than making hasty withdrawals, suspension, and withholding of loans. We will also meet with banks in the near future to urge them to take timely action so that with joint efforts from municipal governments and the housing and urban-rural development authorities, they will make good use of independent policy tools according to each city's own conditions to better satisfy the legitimate financing needs of real estate projects.

Second, we will urge financial institutions to effectively meet the requirements in managing operating property loans. Last night, the NFRA and the PBC jointly released a notice on managing operating property loans. The notice, which is quite targeted and made after conducting preliminary investigations and soliciting opinions and suggestions from the relevant sectors, financial institutions, and relevant authorities, allows banks to provide operating property loans for property developers. Such loans, provided by national banks on the basis of controllable risks and business sustainability, are permitted to be used by rule-following and promising real estate companies to repay their outstanding loans and bonds by the end of this year.

Third, we will continue to provide quality housing loan services for customers. According to each city's own conditions, we will support local municipal governments and housing and urban-rural development authorities to further improve housing loan policies involving down payments and mortgage rates. We will also guide and urge banks to provide better financing services to meet people's demand for buying their first homes or improving their housing situation.

Fourth, we will guide and require banks and other financial institutions to strengthen their support for the "three major projects" that include the construction of public infrastructure used for daily life and emergency situations and the rebuilding of "villages" inside cities. Meanwhile, solid progress is expected as soon as possible. Thank you.