(Yicai) Jan. 23 -- To offset a plunge in mortgage lending and to take advantage of the country’s loose monetary policy, China’s banks are trying hard to attract consumer loan customers by increasing the amounts that can be borrowed and cutting annual interest rates.

China Construction Bank, Agricultural Bank of China, Postal Savings Bank of China, Industrial and Commercial Bank of China, and Bank of Jiangsu are among the mid-sized and large lenders that are promoting these new products.

Some have raised the borrowing limit to CNY1 million (USD140,000) from the usual CNY300,000 (USD42,000), while others are even offering up to CNY5 million, if property is used as collateral.

The banks are trying to counter the massive shrinkage in their mortgage business, insiders told Yicai. Mortgage lending at the six state-owned banks sank by CNY205.7 billion (USD28.7 billion) in the first half of last year, versus increases of CNY404.9 billion and CNY2.48 trillion (USD346.5 billion) in the same periods of 2022 and 2021, Yicai calculated.

Due to the short-term weaker contribution from the real estate sector, including borrowing by developers and homebuyers, small-scale consumer lending is expected to grow to about CNY2 trillion (USD280 billion) this year, said Dai Zhifeng, director of the Zhongtai Securities Research Institute and chief banking industry analyst.

“This is their way of improving the bottom line through quick turnover, even though the profit margin on individual cases is small,” a banker told Yicai, adding that boosting consumer lending has become an important way for lenders to bolster their loan business.

But consumers have given a generally lukewarm response. A Guangzhou resident told Yicai that although he is qualified to take out one of these larger loans, he does not need such a large amount of cash.

“People who meet the qualifications to apply for large consumer loans are people who have stable incomes, but many of them are doctors, teachers, and civil servants, people who are usually conservative in their spending habits,” a bank manager in southern China told Yicai. “So not many people actually apply for loans at the maximum limit.”

Editors: Tang Shihua, Futura Costaglione