Chinese new home sales surged 133% in January and February this year, while property investment rose 38%. That demand helped push real estate loan growth up 14%, a seven-year high, over the same period
China’s medium-to-long-term consumer loans, comprised mainly of mortgage lending, rose 72% to hit a record Rmb1.4tn in the first two months of this year.
The PBOC responded in February by instructing domestic and foreign lenders operating in the country to keep new loans in the first quarter of the year at roughly the same level as last year, if not lower, according to people with knowledge of the situation. The directive could translate into a considerable drop in bank lending, the largest source of financing for the world’s second-largest economy.
