China Mortgage

In this paper we will discuss about the mortgage market in China. The market is growing and in many states of China, the government is introducing some rules and regulations for mortgage processing.

The mortgage market of China is growing. The housing mortgage system has been spreading across all over the country for the last decade. Several cities have constituted some regulations and legislations to process mortgage on real property. For example, in Guangzhou the state government introduced some regulations for mortgage handling. Here the domestic mortgage lenders had to take the license from a central bank.

The maximum time for home loan repayment is thirty years. Prospective customers searching for homes are mainly required to pay down 20% of the total purchasing price from their own savings. The buyers are used to pay one-third or 50% of the total purchasing price in cash mainly due to high savings rate, almost 45%, and limited resources for financing.

In China, the biggest home mortgage loan provider is the China Construction Bank (CCB). According to a report, in 1999, the amount of housing loans that had been made by the four state commercial banks was almost 43 billion US dollars.

Apart from the bank loans, the urban workers are also used to borrow from housing provident funds (which is named as Zufang Gongjijing) from their work units or companies. The employees contribute 4 to 8% of their monthly salaries into the provident fund.
In 1998, the total amount of outstanding mortgages was almost 51.7 billion US dollars. By the end of 2003, that value went up to 1452.8 billion US dollars.
By the end of 2004, the total amount of outstanding Mortgages in China climbed up to to 1,670.7 billion US dollars. That is, it increased by 42.4% compared to figure of 2003.

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Last Updated on : 24th August 2013