March new RMB lending came in above market expectations at RMB1370bn. Stronger household loans amid robust property sales is seen as the main driver. Details showed that lending to household increased by RMB639bn in March, compared with a fall of -RMB7bn in February.

That said, corporate lending eased to RMB669bn, down from RMB811bn in February. However, mid-long term lending held up well, likely reflecting stable infrastructure investment growth. M1 growth rose to the highest reading since October 2010, suggesting better funding available for corporate investment needs. The overall lending environment remained supportive in Q1.

Given PBoC's accommodative monetary policy stance, lending growth to remain stable in the near future. Nevertheless, some of the strength in mortgage loans may moderate in the coming months as macro-prudential tightening becomes effective in first and second tier cities.

"More accommodative policy measures, especially greater fiscal easing to accelerate infrastructure investment still holds the key for a sustainable growth recovery. We continued to expect 50bps rate cut and 350bps reserve ratio cut for the rest of 2016." said HSBC in a report.