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 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.
(China Daily September 26, 2007)
