Xing Huina:

The last question.

Securities Times:

Earlier, a lot of information has been presented regarding the real estate market. I would like to ask the PBC to provide an overview of the financing of the real estate industry in the first half of the year, as well as the current status of real estate credit supply and early repayment of mortgage loans. Thank you. 

Zou Lan:

The relevant information has already been explained quite clearly. Ms. Ruan has introduced the general situation regarding real estate loans. While outstanding loans are often mentioned in statistics, the support for real estate market loans is more evident in loan issuance data. The issuance of property development loans increased by around 200 billion yuan year on year, and personal housing loans have increased by more than 510 billion yuan year on year. As for early repayment of mortgage loans, there has been a substantial increase due to interest rate considerations, which is expected to continue for a quite long time. Although the issuance of loans has maintained a significant growth rate, the early prepayment of loans is also increasing. Judging only from the number of outstanding loans may lead to the misconception that credit issuance is insufficient. However, it is crucial to analyze the data structure when studying the current situation. 

Regarding early prepayment of mortgage loans, as I mentioned, 99% of housing mortgage loans are in line with a floating interest rate mechanism. On the basis of the loan prime rate, a spread is determined based on market conditions at the time of contract signing. The spread is fixed during contract periods, be it a 20- or 30-year contract. We announce the loan prime rate periodically, which are sometimes lower or higher. Since last year, the loan prime rate has declined by 45 basis points. Therefore, according to contracts, interest rates of loans have automatically decreased by 0.45 percentage point. However, the spread is fixed. That is why people may find that interest rates of loans issued in previous years are higher than those of recently issued loans. The early repayment of mortgage loans is not driven by one single factor, but also by other elements such as investment yields. The practice of breaking the rigid redemption of investment products and some cases of trading below net asset value at the end of last year prompted people to adjust their allocation of assets, as they perceived it to be more beneficial. Deposits, and especially fixed-term deposits, have been increasing. Families weigh up their choices, and a lot of people choose to make early mortgage repayment. Though the support in credit issuance has increased further, the impact on outstanding loan balances remains relatively small. Thank you. 

Xing Huina:

That concludes today's press conference. Thank you to all the speakers and friends from the media. 

Translated and edited by Zhu Bochen, Wang Qian, Zhang Rui, Huang Shan, Xu Kailin, Xiang Bin, Wang Yiming, Gong Yingchun, Zhou Jing, Liu Jianing, Li Huiru, David Ball, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.