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Overseas Property News

China's top banks may ease mortgage lending

Big 4's move latest policy step by the state to lift sliding property market

Posted on 24-Sep-2014

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China's top banks may ease mortgage lending

[SHANGHAI] China's four biggest banks may ease mortgage lending, the latest in a series of policy steps aimed at supporting the country's sliding property market, the 21st Century Business Herald reported.

Criteria for loans to first-home buyers may be eased and people who have paid outstanding mortgages may be considered eligible for first-home status, the Guangzhou-based newspaper said, citing unidentified people at Industrial & Commercial Bank of China Ltd (ICBI) and Agricultural Bank of China Ltd.

Executives at Bank of China Ltd, China's fourth largest lender, met on Monday to discuss adjusting mortgage policies, according to the report, which cited an unidentified person.

Tight credit is damping housing demand even after the central bank on May 13 called on the biggest lenders to accelerate the granting of mortgages.

While 37 of the 46 cities that imposed limits on home ownership since 2010 had removed or eased such restrictions as at Sept 3 to stem the decline in sales, many homebuyers still have a wait-and-see attitude, according to Centaline Group, parent of China's biggest property agency.

Home prices dropped in August from July in 68 of 70 cities tracked by the government, including in Beijing and Shanghai, the National Bureau of Statistics said on Sept 18, the most since January 2011, when China changed the way it compiles the data.

Banks stopped giving first-home buyers mortgage rate discounts this year. In Beijing and Shanghai, first-home mortgage rates were the same as the benchmark rate in July, and in Guangzhou they were 5 per cent to 10 per cent higher than the benchmark rate, according to Centaline.

Now, a Chinese bank may start offering a 30 per cent discount on mortgage interest rates to first-home buyers, the Shanghai Securities News reported on Monday, citing an unidentified official from the bank. The newspaper didn't identify the bank.

ICBC, China Construction Bank Corp, Agricultural Bank and Bank of China are the country's four biggest lenders.

Fuzhou, capital of the south-eastern province of Fujian, said on Monday that people who have paid off loans could be considered first-time home buyers and enjoy preferential rates, according to a statement on local government's website.

Since 2010, China's government has required minimum 30 per cent downpayments for first-home buyers, with higher amounts for purchasers of second homes. - Bloomberg


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