(Yicai) May 18 -- The amount of money Chinese households owe lenders fell by CNY786.9 billion (USD115.6 billion) last month, the steepest decline since records began, in start contrast with the seasonal mini spring recovery in the nation’s real estate market.

Household debt stood at CNY71.61 trillion (USD10.52 trillion) as of April 30, down from CNY72.5 trillion on March 31 and CNY71.88 trillion a year earlier, according to data released by the People's Bank of China on May 14. 

Short-term and medium-to-long-term debt fell by CNY446.2 billion and CNY340.8 billion (USD65.5 billion and USD50 billion) month on month. Those declines widened from CNY401.9 billion and CNY123.1 billion a year ago, underscoring broader weakness in consumer borrowing and mortgage demand.

New yuan lending fell by CNY10 billion (USD1.5 billion) month on month and CNY290 billion year on year.

The gap between weaker household borrowing and improving home sales reflects a combination of factors, including changing attitudes toward debt and structural differences in purchasing behavior, but the main driver is the deepening trend of voluntary deleveraging among households, analysts pointed out.

By floor space, home sales rose 3.3 percent in 30 major cities last month from a year earlier after declining for several consecutive months, according to high-frequency data. 

The number of second-hand home sales jumped 13 percent to 156,000, data from China Index Academy showed. The figure climbed 0.8 percent year on year to 489,000 in the four months ended April 30.

But buyers relied mainly on their own funds, with appetite for leverage remaining weak, according to Industrial Securities.

The property market remains in a bottoming-out phase, households are still reluctant to take on more debt, and early mortgage repayments -- a way for households to lower their debt burden and repair their balance sheets -- continue, said Wen Bin, chief economist at China Minsheng Bank.

A  number of other factors are also at work, according to Cao Jingjing, general manager of the index research division at China Index Academy. Households are making larger down payments and using lower loan-to-value ratios, used home prices remain under pressure even as sales recover -- dragging down the average loan size per transaction -- and recent increases in housing provident fund loan quotas in several key cities are likely replacing some mortgage lending, Cai said.

Mortgage lending may continue to shrink, said Wang Yifeng, deputy director of the research institute of Everbright Securities, adding that weak employment, incomes, and expectations among households are holding back borrowing, demand weakness is weighing on mortgage lending, and early repayment pressure remains elevated.

Household appetite for leverage still needs further repair, noted Tan Yiming, chief fixed-income analyst at Tianfeng Securities. He said that any recovery in housing and consumer demand will likely depend on better income expectations and stronger household balance sheets.

Editor: Martin Kadiev