A CCB loan stretches up to five years and a tenant could apply for two repayment terms. But, in the event of rentals coming down during the period, the tenant stands to lose out.
Zhang Dawei, chief analyst at Centaline Property, called the product an example of "irrational consumption", saying it could embolden speculators to drive up home rentals.
He pointed out that the rate of increase in property prices in the past few years has been very much above that of rental prices because there's no way to leverage the rental market, and the new rental loans could aggravate the situation.
If leverage appears, he warned, rental prices will rally and this would be unfavorable for consumers in the long run.
Another disturbing consequence would be the loans being used by some people as a convenient way to access capital. According to CCB's customer service department, the home rental loans are not restricted to parties working in association with the bank. In other words, any tenant can apply for such loans for any apartment as long as the owner gives the nod.
It's also not difficult to secure such loans. An applicant only needs to have a monthly salary of more than 5,000 yuan, along with a social security payment record for three months and an uncheckered personal credit history.
This means any person could pretend "leasing " a home to anyone who, after securing the loan, only needs to pay it back monthly through the fake tenant's account.
After all, the annual interest rate for such loans is between 4.35 and 4.75 percent, equivalent to the central bank's benchmark interest rate, but lower than that of a home purchase loan of 4.9 to 5.4 percent. And, its credit ceiling is one million yuan.
To avoid that, Yan Yuejin, research director at E-house China R&D Institute, suggested that banks step up checks on applicants and surveillance measures are needed. One precautionary measure is to create a blacklist for those who cheat, he said.
According to CCB, they have set up special teams to probe lease transactions to ensure they are genuine.
Yan said a rental loan is, in fact, a special kind of consumer loan. In the past two years, a huge pool of consumer loans has flowed into the housing sector, boosting homes prices and triggering a crackdown by regulators.
As a result, both transaction volumes and prices have stagnated recently and developers have been looking for ways to reverse the situation. Long-term leasing seems to be the answer and rental loans can help improve their cash flow, forcing them to rent out the 5,481 apartments, most of which had originally been intended for sale.
Although there are still loopholes to be dealt with, home-rental loans are set to propel the rental sector to a certain degree. It could lead to the emergence of professional leasing companies, with CCB having already invested in two such companies in Shenzhen.
