BEIJING -- Home buyers in some parts of China are starting to face increasing mortgage requirements as Chinese State-owned commercial banks are setting higher requirements as part of the new moves to tighten real estate credit.
China Construction Bank (CCB), the nation's second largest lender by market value, on Tuesday confirmed that its subsidiaries in the country's eastern province of Zhejiang raised the minimum down payment for first home buyers to 40 percent.
There have been media reports saying that Zhejiang branches of the CCB, along with the Bank of China (BOC) and the Agricultural Bank of China (ABC), have raised mortgage rates for first home buyers by 5 to 10 percent of the benchmark interest rate.
The reports also said minimum down payments were raised to 40 percent from the current 30 percent in the eastern China province, one of the regions that had witnessed the largest home price increases in the past years.
Sources with the CCB told Xinhua that the bank's Beijing head office has ordered its subsidiaries to keep down payment requirements no less than 30 percent for first home buyers, though they can make adjustments based upon credit conditions and the regional market.
However, both the ABC and the BOC denied instituting such changes in down payment requirements.
Sources with the ABC said its Zhejiang branch is "considering adjustments in mortgage rates for first home purchases", but the exact rate of increase is not decided, and this would not be a "nationwide move."
Meanwhile, sources with the BOC said down payment requirements for both first and second home purchases have remained unchanged, but it might take a longer period of time to get the loans due to tightening credit in the real estate sector.
Last week the China Banking Regulatory Commission (CBRC) refuted market rumors about raising minimum down payments for first home buyers to 50 percent, saying that the requirement at the national level remains 30 percent, while that for second home buyers is still 60 percent.
The Chinese government has notably raised down payment requirements and mortgage rates for non-first home buyers to crack down on speculation and curb home price growth. Currently, mortgage rates for second home buyers is set at 1.1 times the benchmark interest rate.
Zhao Qingming, senior analyst at the CCB, said there is little possibility for a nationwide increase in down payment requirements, except in cities that have seen excessive growth in property prices.
In Hangzhou, capital city of Zhejiang province, prices of new homes were up 1.4 percent year-on-year in March this year, while prices of second-hand homes climbed 3.7 percent from one year ago, according to the National Bureau of Statistics.
"Banks have been prudent in real estate loans this year, and a regional adjustment in mortgage requirements is merely a move in risk prevention," he said.
Lian Ping, chief economist with the Bank of Communications, said there is a demand for higher down payments in the banking system, but there would not be large-scale adjustments if the regulator does not want a change in policies.
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