A residential real estate project in Beijing, China – Photo: BLOOMBERG
Real estate backed securities were once a relatively safe and popular investment instrument in China. This is a form of securitization of real estate mortgage loans, also known as real estate securitization.
According to Bloomberg News, aggregated data from cnabs.coma site that tracks asset-backed securities in China, showed sales of real estate-backed securities fell 92 percent this year to 24.5 billion yuan ( 3Trusted Source ). ,63 billion USD).
The site also recorded no such securities issued since the end of February this year, the longest absence since 2015.
According to Jerry Fang, an analyst at financial services provider S&P Global Ratings, the above situation shows that the amount of real estate investment in these securities is very small in the first half of 2022, as well as the demand for regulation. mortgage loans of banks are no longer strong.
Mr. Fang said that when real estate-backed securities recover in China depends on the motivation from the source of collateral and the management stance of the Chinese government.
According to Bloomberg, this situation also reflects the impact of the unprecedented real estate crisis in China. A record series of defaults by real estate developers have occurred, increasing the risk for individuals and lending institutions in China.
In particular, buyers of unfinished apartment projects here are simultaneously boycotting mortgage payments, putting pressure on the government to resolve the delay in construction.
New home sales fell 32% in the first half of the year, and mortgage lending activity hit its lowest level since at least 2016, despite the country cutting interest rates, according to Chinese government data. rates for new loans.
About $300 billion in residential mortgage-backed securities were sold between 2018 and 2021 in China, according to Fitch Ratings. As a result, this country has become the second largest market in the world after the US.