Individual mortgage growth dipped in October in Shanghai after state moves to curb speculation in the property market, the central bank said yesterday.

 

Individual mortgage at banks in Shanghai added 4.98 billion yuan (US$671 million) in October, 1.15 billion yuan less than the figure a month ago, the Shanghai headquarters of the People's Bank of China said yesterday in a statement.

 

A wait-and-see attitude is prevailing in the property market after a September 27 rule from the central bank and the China Banking Regulatory Commission that requires mortgage holders who apply for another home loan to produce a downpayment of at least 40 percent and pay a 10-percent premium on their interest rate.

 

For people seeking a third or fourth mortgage, the downpayment and interest rate should be much higher, with specific figures determined by commercial banks.

 

The Shanghai headquarters of the central bank estimated the newly added mortgages are mainly those approved before the tighter move.

 

Two other factors also help drag down mortgage growth.

 

One is that working days are less in October due to the National Day holidays. The other reason is that some mortgage owners tried to pay back their debts to lenders before the new mortgage rates took effect.

 

China has raised its lending interest rates five times this year. For existing mortgage bearers, the extra payments begin at the start of the new year.

 

That's why some mortgage owners increase payments before the year's end.

 

Yuan savings at overseas banks dropped 460 million yuan in October in the city.

 

And yuan savings at all banks in Shanghai decreased 55.3 billion yuan, a further drop of 60.5 billion yuan than the September level.

 

The stock market has continued to drain money from the banking system as initial public offerings flourish on an already burgeoning bourse.

 

New foreign currency lending grew to US$1.17 billion in October, up from US$1.13 billion a year ago.

 

(Shanghai Daily November 9, 2007)