HOME   NEWS   SPECIAL REPORT   PHOTO   COMMENTARY   VOICE   LEARNING CHINESE
NEWS > Business
Mortgage rate may rise this week
2007-09-26 02:32:35  China Daily      

The central bank is expected to increase the interest rate of mortgage loans to 1.1 times the benchmark one-year lending rate this week, sources said.

The move is an attempt to curb the rise in house prices and speculation in the property market.

The current five-year lending rate has reached 7.83 percent after the central bank raised the interest rate for the fifth time this year on September 13.

This means the interest rate for five-year mortgage loans could reach as high as 8.613 percent if the central bank makes a move this week.

"With the expansion of mortgage loans, and as the central bank continuously raises interest rates, mortgage loans are beginning to face a high risk of default," China Construction Bank (CCB), the lender with the highest mortgage loans in China, said in its latest report.

Total non-performing mortgage loans in three major commercial banks - CCB, the Industrial and Commercial Bank of China, and Bank of China - rose to 19.2 billion yuan (US$2.55 billion) at the end of 2006 from 18.4 billion yuan in 2005, according to CCB.

The central bank is likely to stipulate commercial banks to raise mortgage deposits to at least 40 percent for homebuyers who intend to buy a second apartment, according to the source.

"Homebuyers will have to make a down payment of 40 percent to buy a second apartment, and for apartments for commercial use, the down payment will be raised to as high as 50 percent," he said.

The minimum deposit for an apartment of more than 90 sq m is currently 30 percent while for apartments less than 90 sq m it's 20 percent.

The central bank will also require commercial banks to stop lending to property developers who hoard land and house for speculation purposes, according to the source.

Property prices in 70 major cities jumped 8.2 percent in August from a year earlier after gaining 7.5 percent in July, according to figures from the National Development and Reform Commission.

Housing prices in Beijing rose 12.1 percent from a year earlier, while prices in Shenzhen went up 20.8 percent.

MORE NEWS
WTO panel to investigate U.S.-China dispute on IPR protection  
China lifts ceiling price of APHM to 360 yuan  
China's Haier to cooperate with Cisco in home, individual networking  
Chinese auto producer Yutong exports more buses to Cuba  
China Focus: Chinese toy producer in dead end after Mattel recall  
China to continue attracting foreign investment actively  
GM to export Buick Enclave SUVs to China  
China State Shipbuilding completes 12b yuan offer  

SINA English is the English-language destination for news and information about China. Find general information on life, culture and travel in China through our news and special reportsˇAor find business partners through our online Business Directory. For investment opportunities with SINA, please click the link "Investor" below.
| About SINA | Investor | Media Kit | Comments or Question? |
Copyright © 1996-SINA Corporation, All Rights Reserved