Banks in 17 cities stop housing loans: report

Housing loans have been suspended in some banks in 17 of 32 major cities, including Beijing, Shanghai, Guangzhou and Shenzhen, Beijing-based International Finance News (IFN) reported Monday citing property statistics.

Housing loans are either being postponed or stopped in these cities mainly because small and medium-sized banks have issued too much loans in the first half of the year and thus have little left for the second half of the year, according to the report.

Household buyers who apply for loans now can only get the money two months later, according to Homelink, a real estate brokerage.

An expert with rong360.com, an online financing service provider, said that banks' lack of money is just one of the reasons. More importantly, banks are unwilling to issue loans considering potential risks if home prices drop, according to the expert who did not give his name.

"Besides having little money left, banks are reluctant to issue loans since currently house prices are too high, which pose great risks for them if home buyers default on mortgages, and once house prices begin to decrease," Yin told the Global Times Monday.

The need for loans from private home buyers has been increasing this year. Statistics for the third quarter from the central bank shows that outstanding property loans from main financial organizations, including foreign ones, reached 14.17 trillion yuan ($2.4 trillion) by the end of September, with year-on-year growth of 19 percent.

The suspension of mortgages has spread from first-tier cities to second- and third-tier cities, and even loans for customers' first houses have also been suspended, according to an investigation on household loaning conditions of nearly 500 banks in 32 key cities nationwide, conducted jointly by Z-Park Association for Internet Finance and rong360.com, according to the International Finance News report.

Banks denied having stopped loans, but acknowledged that issuing loans has become slower, according to the report.

"Our bank never stops issuing loans, and home buyers can apply as usual," a staff member with a Beijing branch of China Construction Bank was quoted as saying by IFN Monday, noting that it's routine that applying for loans is easier in the first half of the year than in the second half.

It's not surprising that banks have denied stopping issuing loans because it's against the government's policy of encouraging banks to issue loans to home buyers, especially those purchasing their first home, Yin noted.