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Real estate sector faces tighter credit
Source: CCTV.com
02-18-2008 11:40
The year of the Rat may not be a promising one for property developers across China. Tighter lending policies spell problems ahead for liquidity and financing. But it's not all gloom and doom, experts also think there is enough demand to prevent any significant price-falls.
After booming in recent years, China's real estate market is finally beginning to feel the pinch. Banks across the country are tightening lending policies and that means less credit all around.
Liu Guolin, Credit Manager of Agricultural Bank of China said "In 2008, we will make some new policies on housing loans. Generally, they will be tighter, especially in those areas with rapid price growth. We are also aware that most property developers have businesses throughout the country, so we will adopt different policies based on specific projects."
The Bank of Communications, China's fifth largest lender, has also announced plans to control the total amount of housing loans this year. The Merchant's Bank also says it will ensure that housing loans stay within a given proportion of its total loan structure. In 2008, developers are likely to feel the tightening trend even more in Shenzhen, Shanghai and Beijing, where property prices have received the greatest attention. Newly established property companies are also going to find it difficult to get necessary loans.
But there is some good news. So far, there have been no signs of a mortgage meltdown in China similar to what first seen last summer in the United States, and experts do not foresee property prices falling substantially. Strong economic growth and surging demand from upwardly mobile families are likely to keep demand up, especially for new houses.
Below is the weblinks to the original articles.
Interesting article...
Interesting article... thanks!
JJ
Caveat emptor.... Caveat
Caveat emptor.... Caveat emptor.
Same can be said about Zhuhai...
http://cupofcha.com/2008/02/17/august-8th-changes-everything-to-some.htm...
I watched the CCTV story a
I watched the CCTV story a little while ago, and also read the article. There was one paragraph (the last one), however, that I though was either a bit out of place, or the author is misinformed about the “real” cause of the mortgage “crisis” in the US.
Here it is:
“But there is some good news. So far, there have been no signs of a mortgage meltdown in China similar to what first seen last summer in the United States, and experts do not foresee property prices falling substantially. Strong economic growth and surging demand from upwardly mobile families are likely to keep demand up, especially for new houses.”
The difficulties that many mortgage lenders in the US are facing today are, for the most part, self-inflicted wounds. They are a direct result of greedy, unscrupulous lenders preying upon the stupidity of an unfortunately and alarmingly large percentage of the American buying public.
In March of 2005, I closed on my $165,000 house in West Jordan, Utah. The mortgage I signed up for was a $155,000 FHA guaranteed loan at a 5.5% “fixed” interest rate. Indeed, there were more than a few “hoops” I had to jump through, including a $10,000 down payment, to get the loan approved, but I managed to do it. It really wasn’t really THAT difficult.
Within days of moving into the house I was bombarded by both email and postal mail with unsolicited offers to refinance my house for up to 135% of my house’s purchase price. All of there offers must have been written by the same copywriter, because they all read something like this;
“Dear Mr. and Mrs. X”
“Congratulations on the purchase of your new home. Your good credit has automatically qualified you for our exclusive “Solid Gold” refinance program. We are ready, willing, and able to refinance your home for up to 135% of your home’s appraised value. This will be cash in your hands that you can spend any way you wish!”
“Just think of it! With this free cash you’ll be able to send your children to college, buy that new SUV or take that fantastic vacation you’ve always dreamed of, or, pay off those nasty credit card debts.”
“All of this is available to you for the low, low monthly payments of less than $200 per month. Why wait? Apply NOW, and begin living the life you have always wanted to.”
Signed,
Dewey, Cheetham, and Howe
Income Diversification Specialists and Aluminum Siding Company
Always, at the very bottom of the page, in 2 point type that no one ever reads, is the disclaimer which states:
“the above is an offer for a second mortgage loan at an adjustable initial APR of 3.5%. actual interest rates and monthly payments may vary and are subject to change according to prime interest rates and market conditions.”
Now, I ask the rhetorical question; what idiots with any more than two brain cells wired together inside their otherwise empty craniums would get themselves locked into a first or second mortgage under these kind of terms?
The answer is, unfortunately, TOO DAMMNED MANY!!
Is it any wonder that so many of these loans in cities like Cleveland, Detroit, Miami, Las Vegas, Chicago, and Los Angeles fell into foreclosure?
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You can get more with a kind word....and a gun....than you can with only a kind word!