Chinese banks’ issuance of securities backed by home mortgages has plunged, as the crisis in the nation’s property sector drags down a once-popular and relatively safe investment tool, reports Bloomberg.
Sales of residential mortgage-backed securities have fallen 92% so far this year to RMB 24.5 billion ($3.63 billion), according to data compiled from cnabs.com, a website that tracks asset-backed securities in China. There’s been no RMBS issuance since the end of February, the longest dry spell since 2015.
The slump “reflects weak mortgage origination volume in the first half of 2022 and less-imminent needs for banks to manage their mortgage loan books,” according to Jerry Fang, an analyst at S&P Global Ratings. He said when issuance picks up will depend on mortgage-origination momentum and Beijing’s regulatory stance.