In April of this year, loans taken out by Chinese residents saw a significant decrease of 786.9 billion yuan, hitting a new low in available data. Short-term and medium-to-long-term loans taken by residents both reduced, indicating an overall contraction in consumer loans and housing loan demand.
According to a report by “First Financial” on May 17, the financial data released by the People’s Bank of China for April showed a reduction of 786.9 billion yuan in resident loans, a year-on-year decrease of 265.3 billion yuan. The data indicates a decrease of 446.2 billion yuan in short-term loans taken by residents, a year-on-year decrease of 44.3 billion yuan; and a decrease of 340.8 billion yuan in medium-to-long-term loans, a year-on-year decrease of 217.7 billion yuan. These figures suggest an overall shrinkage in resident demand for consumer loans and housing loans.
Industry experts believe that the main reason for the decline in resident credit in April was the continued unfavorable conditions in income and employment expectations. Lian Ping, Chairman of the China Chief Economist Forum, stated that the sharp decrease in resident credit for April, including consumer loans, car loans, and housing loans, exceeded the volume of loans in the same period last year. The main reasons for the decline were subdued demand for home purchases by residents, insufficient growth in mortgage loans, which dragged down credit expansion. Currently, the growth rate of household income is slowing down, employment expectations are unfavorable, especially with significant pressure on youth employment, insufficient consumer confidence, high debt pressure, leading to a more notable trend of reducing household debt and increasing precautionary savings.
Additionally, the “2026 First Quarter Macro Leverage Rate Report” released by the National Institute of Financial Development (NIFD) showed that in the first quarter, the growth rate of household debt was -0.4%, marking the first negative growth since the third quarter of 1995. It is expected that the growth rate of housing loans will decrease from -1.8% at the end of 2025 to -2.6%, and the growth rate of consumer loans (excluding housing loans) will shift from 0.7% at the end of 2025 to -1.2%, marking the first negative growth. The downward pressure on house prices and the slowdown in income growth are key factors restricting credit expansion.
Looking ahead, industry experts generally believe that the real estate market is still in a bottoming-out phase, and credit demand is yet to be restored. Tan Yiming, Chief Analyst of Fixed Income at Guotai Junan Securities, stated that looking ahead, the release of resident demand for home purchases and consumption may require further observation in conjunction with improvements in income expectations and balance sheet repair.
Wang Yifeng, Deputy Director of the Research Institute at Everbright Securities, noted: “Mortgages may continue to see negative growth.”