Date
12 December 2017
Several Chinese banks are reported to have raised their mortgage interest rates last month for first-home buyers. Photo: Bloomberg
Several Chinese banks are reported to have raised their mortgage interest rates last month for first-home buyers. Photo: Bloomberg

China banks said to have raised first-home mortgage rates

A survey has found that more than 40 percent of commercial banks in 21 Chinese cities have raised their mortgage loan rates for first-home buyers by 5-10 percent in May, with some hiking the rate by as much as 20 percent against the benchmark rate, China Business News reported Wednesday 

The moves came as market liquidity remained tight, the paper said, citing research house Rong360.

Banks had to take a fresh look at their business as the People’s Bank of China had on May 12 ordered lenders to speed up mortgage approvals, especially for first-home purchasers.

Restricted by lending quota, most joint-stock and city commercial banks normally take a “prudent” approach with regard to mortgage lending, a banking industry source was quoted as saying. Decisions are also influenced by the existing curbs on the property market.

However, under the central bank’s ‘window guidance’, commercial banks have sped up mortgage approvals, which take 2-7 days now, the report said. 

However, in view of the higher cost of funds and thin profits in the mortgage loan segment, some banks prefer to lend to sectors other than property.

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