China’s mortgage risks are controllable, according to Yan Qingmin, Assistant Chairman at the China Banking Regulatory Commission (CBRC).
His remarks come after more cities in the country witnessed declines in housing prices. Data from the National Bureau of Statistics of China revealed that 48 out of 70 major cities reported such drops in January from December, while prices in 22 cities remained unchanged.
Without providing the exact figures, Yang noted that the regulatory commission’s stress test on commercial banks indicated that mortgages accounted for a “relatively low” proportion of banks’ asset portfolios.
He added that mortgage risks are relatively less complicated, as the central government has effectively controlled financial derivatives associated with the property sector, allowing only a few innovative financial products into the market.
He also noted that most of the mortgages were done prior to 2009, when property prices had peaked in the country.
In addition, the healthy state of the financial sector and the relatively higher downpayment provide strong support for banks to fend off potential risks, said Yang.
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