In the first half of this year, the most competitive business area in the banking industry has undoubtedly been housing mortgages. With the 5-year LPR (Loan Prime Rate) declining twice within the year, banks have been aggressively lowering mortgage rates to attract more customers during the sluggish real estate transaction period.

According to the semi-annual reports disclosed by listed banks, the contraction of housing mortgages that began last year continues. The total balance of personal housing loans from the 42 listed banks decreased by 319.1 billion yuan compared to the beginning of the year, with the six major state-owned banks alone accounting for a reduction of 311.9 billion yuan.

While the mortgage assets have shrunk, the rate of loan defaults has been on the rise. Data from First Financial, based on statistics from Wind, reveals that among the 42 listed banks, 21 disclosed the non-performing loan (NPL) rate for personal housing loans for the half-year period, with 19 showing an increase to varying degrees. On average, the NPL rate for housing loans across these 21 banks increased by 0.1 percentage points.

The mortgage scale shrank by over 300 billion yuan in half a year. Wind data indicates that in the first half of the year, the balance of personal housing loans from the 42 listed banks exceeded 34 trillion yuan. The six major state-owned banks firmly hold the "mortgage market," with their personal housing loan balances all exceeding one trillion yuan in the first half of the year, totaling 26 trillion yuan, which accounts for 77% of the 42 listed banks.

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Among them, the bank with the highest balance of personal housing loans remains the China Construction Bank, with 6.31 trillion yuan; followed by the Industrial and Commercial Bank of China, reaching 6.17 trillion yuan. Among the joint-stock banks, only China Merchants Bank and Industrial Bank had personal housing loan balances exceeding one trillion yuan in the first half of the year, at 1.38 trillion yuan and 1.07 trillion yuan, respectively.

Looking at the increase, the trend of shrinking housing mortgage scale has spread from 2023 to 2024. In 2023, the housing mortgage scale of the 42 listed banks shrank for the first time, reducing by 546.7 billion yuan compared to the previous year, with the six major banks reducing by more than one trillion yuan combined. In the first half of this year, the housing mortgage balance of the 42 listed banks decreased by another 319.1 billion yuan compared to the beginning of the year, with the six major banks reducing by 311.9 billion yuan combined.

In terms of percentage, state-owned banks decreased by 0.82% from the beginning of the year, joint-stock banks decreased by 1.26%, and regional banks decreased by 1.77%.Among them, Industrial and Commercial Bank of China and Agricultural Bank of China both saw a reduction of over 100 billion yuan compared to the beginning of the year, with 123.1 billion yuan and 100.7 billion yuan respectively; followed by China Construction Bank and Bank of China, with a reduction of 76.5 billion yuan and 33.6 billion yuan in personal housing loan balances respectively in the first half of the year; Industrial Bank and China Merchants Bank both reduced by over 10 billion yuan; and Rui Feng Bank had the highest reduction ratio, with a decrease of 9.76% compared to the beginning of the year.

Out of 42 listed banks, only 13 banks achieved a net increase in personal housing loans in the first half of the year.

Among them, Postal Savings Bank of China had the largest increase, with a personal housing loan balance of 236.16 billion yuan in the first half of the year, a net increase of 2.36 billion yuan compared to the beginning of the year; China Zheshang Bank had the highest percentage increase, with a personal housing loan balance of 15.53 billion yuan, an increase of 12.66% compared to the beginning of the year; in addition, CITIC Bank's personal housing mortgage loan balance was 98.85 billion yuan, an increase of 1.73 billion yuan.

Striving to maintain the basic mortgage loan base

Looking at the financial reports of various banks, listed banks have generally increased their efforts in housing mortgage lending and improved service experience. However, due to the sluggish real estate sales and factors such as early repayments, the increase has shrunk.

For example, Ping An Bank stated that in the first half of the year, it increased the lending efforts in housing mortgages, certified mortgages, and new energy vehicle loans.

Chongqing Bank stated that in terms of personal loans, it continued to carry out housing loan business, actively implemented new housing loan policies, optimized loan processes, and effectively supported the financing needs of residents for their first homes and improved housing.

Postal Savings Bank of China stated that the bank actively responded to the national policies and regulatory requirements on housing loans, continuously refined online processes, optimized remote acceptance of housing loans, mobile banking online house viewing, and other functions, improved customer service experience, and met the needs of residents for their first homes and improved housing.

Shanghai Rural Commercial Bank stated that in terms of real estate mortgage loans, it significantly increased the efficiency of mortgage loan operations, and the amount of loans increased significantly compared to the same period last year, with an increase of 13.81%. However, the scale of early repayments continued to be high. At the end of the report, the balance of real estate mortgage loans was slightly reduced by 2.877 billion yuan compared to the end of last year, a decrease of 2.82%.

Guiyang Bank stated in its semi-annual report that in terms of personal housing mortgage loans, the bank actively adapted to the new changes in the supply and demand relationship of the real estate market, implemented differentiated housing credit policies, promptly adjusted the standards for the number of personal housing loans, down payment requirements, and interest rate floor policies, fully met the reasonable loan needs of homebuyers, promoted the stable and healthy development of the real estate market, and firmly adhered to the development direction of "doing well in new houses and doing big in second-hand houses". It continuously improved the competitiveness of the "Shuang Mortgage" brand, actively promoted the "mortgage transfer" business, and achieved cross-bank mortgage transfer.Data indicates that as of the end of the reporting period, Guiyang Bank's balance of personal housing mortgage loans stood at 21.2 billion yuan, an increase of 600 million yuan from the beginning of the year, representing a growth of 3.08%.

Default risks test banks' risk control capabilities

Personal housing loans have long been considered high-quality assets for banks. However, it is noteworthy that this year, an upward trend in the non-performing loan (NPL) ratio for housing mortgages has become a common phenomenon. Among the 42 listed banks, 21 disclosed their half-yearly NPL ratios for personal housing loans, with 19 experiencing varying degrees of increase. On average, the NPL ratio for these 21 banks has risen by 0.1 percentage points.

Among them, the NPL ratios for personal housing loans at Qingdao Rural Commercial Bank, Lanzhou Bank, Zhengzhou Bank, and Chongqing Bank all exceeded 1%, at 1.33%, 1.25%, 1.12%, and 1.08%, respectively.

Chongqing Bank's NPL ratio for personal housing loans increased by 0.31 percentage points from the beginning of the year. CITIC Bank's NPL ratio for personal housing loans is 0.71%, up by 0.21 percentage points from the end of the previous year; the watch list loan ratio is 0.30%, up by 0.05 percentage points from the end of the previous year.

In response to this, CITIC Bank stated that due to factors such as sluggish real estate sales and a slowdown in economic growth, both the NPL ratio and the watch list loan ratio have risen compared to the end of the previous year. The bank maintains a weighted average mortgage ratio for personal housing loans at around 40%, indicating that the overall risk of the personal housing loan business is essentially controllable.

China Merchants Bank's NPL ratio for personal housing loans in the first half of the year was 0.4%, up by 0.03 percentage points from the end of the previous year; the watch list loan ratio was 1.16%, up by 0.21 percentage points from the end of the previous year; and the overdue loan ratio was 0.69%, up by 0.15 percentage points from the end of the previous year.

In its semi-annual report, China Merchants Bank stated that it has consistently conducted regular monitoring and revaluation of the value of existing collateral. As of the end of the reporting period, the weighted average mortgage ratio for personal housing loans was 33.05%, up by 0.12 percentage points from the end of the previous year, with the collateral remaining sufficient and stable, indicating that the overall risk of the personal housing loan business is controllable. Additionally, in terms of front-end access, the bank adheres to the "three excellences" strategy of "selecting excellent customers, selecting excellent collateral, and selecting excellent regions." At the same time, it resolutely implements national policies, adopts city-specific measures, and works on risk prevention and control, striving to enhance the risk resistance of the personal housing loan business.