Business / Industries

Banks' exposure to real estate healthy: official

(Xinhua) Updated: 2014-06-06 15:17

BEIJING - Lending by Chinese banks to the real estate sector is in stable condition, a senior official said Friday amid concerns that a cooling property market may lead to increasing risks of bad loans.

Banks' exposure to real estate healthy: official
Banks' exposure to real estate healthy: official
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"Currently, the real estate market draws 20 percent of total bank lending in China, of which around 70 percent goes to home buyers in mortgage loans," said Wang Zhaoxing, vice-chairman of the China Banking Regulatory Commission (CBRC).

"Meanwhile, among the mortgage loans, the bad loan ratio is less than one percent. The quality of mortgage loans is very stable," Wang said at a press conference held in Beijing.

In Chinese cities, first-time home buyers are normally required to pay a 30-percent down payment, while for those wishing to buy a second home, the down payment is at least 70 percent.

In order to meet the basic housing demand, especially from low and middle-income earners, the central bank urged the country's commercial banks last month to be quicker in approving and issuing loans to eligible home buyers, mainly first-time buyers.

Wang added that state-supported projects such as affordable housing and renovation of shanty towns will also be prioritized in securing bank loans.

Housing prices in major Chinese cities have shown apparent signs of cooling with sluggish home sales and increasing home supplies since this year. New concerns have cropped up that, due to growing risk awareness, banks are reluctant to grant mortgage loans.

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