China
Home Loan Market is anticipated to project robust growth during the forecast
period on account of increasing marketing strategies, automation of loan
process, increasing household construction, and increasing digitalization. The
majority of people's primary and most expensive goal is to acquire a home. The
construction of a house requires a lot of work on the side of the buyer, and
the only way to fit the property into their budget is by taking out a home
loan. The acquisition of a new house or apartment, the land on which to build
it, or even home improvements, expansions, and repairs can all be funded by a
home loan.
Since 1978, there has been a
significant rural-urban migration in China. The 35 largest metropolitan regions
saw a dramatic increase in population. The demand for housing in the major
metropolitan regions increased significantly as a result of this significant
rural-to-urban migration. Additionally, as employment and disposable money
increased, so did the need for homes with larger space.
Increasing
Housing Cost Will Fuel Market Growth
Currently,
housing costs in China are high and still rising. The entire society
is concerned about the phenomenon of rising housing costs. Ordinary families
cannot afford a home and the pressure of filling up all available housing
options has led to discontent with the high cost of housing. In an effort to
stabilise home prices, the government has also implemented a number of control
measures, although these have not been successful in slowing the increase in
prices. The national economy's ability to grow healthily has been gravely
hampered by the current, sustained high home prices. Real estate bubbles'
formation will lead to economic stagnation, and excessive housing costs will
result in a number of social and economic issues. Home
loan market will directly be influenced by increasing housing loans. In the primary market, mortgages come in the form
of commercial personal loans and Housing Provident Fund (HPF) loans. Due
to the amount limitations on HPF loans and the fact that they are sometimes
insufficient to close deals because of the high cost of housing, hybrid
mortgages that combine the maximum amount of HPF and commercial mortgages were
created. The majority of mortgages in the market are commercial mortgage loans.
Therefore, rising housing prices will have direct impact on China home loan
market.
Increasing
Household Construction Will Boost The Market Growth
The
macroeconomic and socioeconomic development of a country is significantly
influenced by the construction of new homes. New housing development
has a large direct and indirect impact on the overall loan market. This is
especially true in countries with economies that are supposedly driven by
construction, such as Spain and China. The Chinese government
started its housing market reform to better living conditions of urban
residents and provide enough houses for immigrants from rural areas. Owing to the reform, there has been a significant
increase in housing demand and price growth, more new homes were being built. A
significant number of people moved from rural to urban areas in search of work,
as a result of the swift economic growth. The housing reform gave families the
opportunity to buy more comfortable homes. The need for more comfortable living
drove up home prices even further, which attracted more capital and loans for
the development of more homes. China invested $29 billion in special financing
to complete housing projects. As a result, countless new house construction
projects and more new real estate businesses were launched in urban China.
Thus, all these factors played an important role in China home loan market.
Low
Interest Rate of Home Loan in China Will Lead to Market Growth
China permitted
banks to lower the limit on home loan interest rates. The People's Bank of
China and China's Banking and Insurance Regulatory Commission state that the
purpose of the action is to support housing demand and encourage the market for
housing market in the nation to grow healthily. In response to weak
market demand, Chinese authorities are easing limits on home purchases in some
locations. Evergrande, a major domestic real estate player, has reported
growing liabilities, and other businesses have seen a dramatic decline in
revenues. In addition to interest rates dropping, loans
are being granted more quickly. In China, nearly
one-fifth of all bank loans are for home loans. In the 103 locations across the
country, applicants receive their loans in around a month, with 19 cities
taking less than 20 days. Thus, lower interest of home loans in China is
expected to boost the market growth.