Home-buyers are having to downsize with the increase in interest rates for housing loans.

Signs show the recent rise is affecting both individuals and real estate investors.

For real estate investors, the increase in housing loan interest rates is actually having a negative impact on business.

Even with the higher rate, housing prices must go up by more than 7 percent for them to make a profit.

In addition, the rate hike has reduced the number of second-hand house-buyers.

According to the People's Bank of China, the minimum interest rate for housing loans of 5 years or more can now rise up to 5.51 percent, a 0.2 percent increase.

Individuals are required to make a 30 percent down payment, instead of the original 20 percent.

Experts say the increase in home-loan rates is to slow down the soaring growth of China's real estate prices and to curb rampant profiteering.

(CRI March 28, 2005)