Researches On The Management Of Credit Risk On Housing Mortgage Loans Of Commercial Bank In China

Housing mortgage loan refers to the loan granted to support borrower purchasing house and making house as mortgage, which is an important branch of consumer loan and is mainly issued by commercial banks in China. Since the housing allotment reform in 1998, housing mortgage loans have been improved in all aspects at a high speed. The scale of housing mortgage loans has been expanded, and the ratio of housing mortgage loans to total loans rises rapidly in China's commercial banks. Housing mortgage loans have become the principal of consumer credit in China. Compared with other types of credit business, the yield of housing mortgage loans is relatively high and stable, the sum of each single loan is small but the risk of which is diversified and the security of which is relatively better. Therefore, China's commercial banks devote major efforts to developing housing mortgage loans for adjusting assets structure, reducing management risks and enhancing profitability. According to China's large scale savings, China's commercial banks have immense potential for the supply of housing mortgage loans. Because of the rapid growth of China's economy, the improving of income levels and the upgrading of consumption structure, China's housing demand releases rapidly and China's housing market has immense potential, which leads to large demand for housing mortgage loans. On condition that supply and demand both thrive, the development of housing mortgage loans will have a bright future, and the rapid expansion of business scale will last for a long time.Striving to develop housing mortgage loans makes positive significance for the overall development of China's economy and society. Firstly, vigorously promoting the development of housing mortgage loans in commercial banks, is beneficial to optimizing assets structure, enhancing assets liquidity, improving assets security and expanding the profits for commercial banks, is beneficial to the all-round development of financial institution and financial market, and thereafter is beneficial to the development of financial industry in China. Secondly, vigorously promoting the development of housing mortgage loans in commercial banks, can promote the conversion of potential demand to real demand in China's housing market, considerably support the operation and development of China's real estate enterprise, and is consequently conductive to the development of the real estate industry in China. Thirdly, vigorously promoting the development of housing mortgage loans in commercial banks, is an effective measure to promote the upgrading of consumption structure and the improving of living level in China, is an effective measure to promote the rapid growth of China's economy, is an effective measure to raise China's employment level, and is consequently an effective measure to develop China's economy in all aspects.China's commercial banks are fully qualified with the feasibility to develop housing mortgage loans. Firstly, the current domestic housing demand is large and that will continue to grow in a relatively long period in the future. Commercial bank's housing mortgage loans have a huge market space in China's vast housing market. Secondly, as one of the pillar industries of China's economy, real estate industry expends fast by the considerable support of national policies, forms a stable housing supply and provides a fully real economy guarantee for the sustainable development of the commercial bank's housing mortgage loans in China. Thirdly, China's commercial banks have adequate capacity and will to provide fund for the development of housing mortgage loans, the rapid development of housing mortgage loans gains fully fund support. Fourthly, the full support of national policies provides a favorable policy environment for the rapid development of commercial bank's housing mortgage loans in China.A significant aspect of developing housing mortgage loans is strengthening the management of credit risk. Although housing mortgage loan is more safe than other types of credit business, credit risk remains to be its inherent risk. The operation of housing mortgage loans is closely related to banking sector and estate industry, so the credit risk of housing mortgage loans can proliferate easily and do critical harm to the development of financial and real economy. Therefore, when promoting the coordinated development of finance and economy, strengthening the management of credit risk on housing mortgage loans is necessary.As for China, housing mortgage loans have a large scale and a high developing speed. The effects of housing mortgage loans to China's finance and economy increase rapidly, too. Presently, the non-performing rate of housing mortgage loans in China's commercial banks has increased to some extent. Although the credit risk of housing mortgage loans in China's commercial banks hasn't obviously caused negative effects on banking industry and national economy, its potential destructive influence is worth attention. With the further development of China's economy and the raising of China's urbanization level, the scale of commercial bank's housing mortgage loans will gain further expansion in China. So, the credit risk of housing mortgage loans will cause more significant effects on China's financial and economic development in the future. Under this background, it is particularly important to strengthen the management of credit risk on housing mortgage loans in China's commercial banks.To strengthen the management of credit risk on housing mortgage loans in China's commercial banks, it is necessary to establish a series of effective prevention mechanism for preventing the risk from its origin. The credit risk prevention mechanism of housing mortgage loans depends on the scientific, effective and operative credit rating mechanism. The operation of the scientific, effective and operative credit rating mechanism helps commercial banks to remove the adverse selection caused by information asymmetric, and to make credit decisions more scientifically and objectively. Therefore, this measure can effectively prevent the credit risk from its origin and conduct a scientific management on the operation of housing mortgage loans. In order to prevent the credit risk effectively, a systematic and scientific evaluation index system is established as the foundation of the credit rating mechanism of housing mortgage loans in China's commercial banks. As each single index has different focal point and nature, the score can't be given out directly. According to the different characteristics and natures of the indexes, a series of rational scoring models are designed for the non-dimensional treatment of the indexes. Then, the scores can be given out according to these scoring models. Considering the hierarchy of the evaluation index system, Analytic Hierarchy Process Model is used for the weighting of the indexes, which combines subjective analysis and objective analysis. By integrating the scores of the indexes, the total credit score can be given out, and the credit risk on housing mortgage loans can be evaluated. Determining the critical value of the credit score scientifically and reasonably, loan decisions can be made according to the evaluation of the credit risk on housing mortgage loans.To strengthen the management of credit risk on housing mortgage loans in China's commercial banks, it is necessary to establish a series of effective control mechanism for controlling and covering the loss caused by the credit risk on housing mortgage loans. The credit risk control mechanism of housing mortgage loans depends on the economic capital allocation mechanism which is based on the accurate measurement of the credit risk. The operation of the effective economic capital allocation mechanism helps commercial banks to achieve the balance between the development of housing mortgage loans and the control of the credit risk, and to keep the capacity of overall control of credit risk on housing mortgage loans. According to the actual generation mechanism of credit risk on housing mortgage loans in China's commercial banks, the VaR Method is used for the overall measurement of the random loss caused by the credit risk on housing mortgage loans, and the Credit Risk+Model based on the framework of actuarial analysis is used for the accurate measurement of the loss distribution of the credit risk. Then, according to the unexpected loss of the credit risk, corresponding economic capital can be allocated.