Shenzhen Renters Offered Low-Interest Loans

Renters in Shenzhen are being offered low-interest loans in a pilot program aimed at helping people afford housing amid skyrocketing prices.
Interest rates as low as 0.363% will be offered for one-year loans and 0.396% for 1-to-3 year loans, according to product information from China Construction Bank’s Shenzhen branch, where the program is being rolled out. A personal mortgage rate at the bank comes with an interest rate of 5-15%, in comparison.
It isn’t clear whether the program will be expanded.
The motive isn’t profit, but instead for China Construction Bank to help the government build a healthy rental-housing market, an employee from the bank’s main branch told Caixin.
To qualify, borrowers must agree to use the low-interest loans to pay their rent in one lump sum based on the length of their rental contracts. The bank stands to gain because landlords can invest the lump sum they receive in investment plans.
The value of China’s rental housing market was 1.1 trillion yuan ($166 billion) in 2016 and is expected to reach 1.9 trillion yuan by 2025 before surging to 4 trillion yuan by 2030, according to estimates from Beijing-based property agent Lianjia.
A previous version of this story understated the current and anticipated values of China's rental housing market.
Contact reporter Liu Xiao (liuxiao@caixin.com)
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