Posted on 03/31/2008 10:24:42 PM PDT by BJungNan
SHANGHAI -- The city's banks have been told to exercise caution on mortgage lending to help combat speculation and stabilize property prices.
Shanghai's banking regulator said on Sunday all local banks must abide by strict mortgage lending policies and spot checks will be conducted.
The statement is a response to recent media reports that domestic banks were lowering lending standards to second-home buyers to boost mortgages, which bring a large share of bank profits.
Analysts said the government will stick to its tightening policy to cool the overheated property market, although an investment slowdown and housing price dips have been seen in major cities like Shanghai, Beijing and Shenzhen.
The central bank and the China Banking Regulatory Commission (CBRC) raised the requirement for mortgage deposits last year for second-home buyers to at least 40 percent, with a 10 percent premium on the interest rate.
China Construction Bank, one of the nation's Big Four lenders, said recently second-home buyers will get favorable policies and a lower interest rate if family members have a living area of less than 26.6-sq-m in their first home.
Other banks have followed suit. The move is seen as a relaxation of the housing policy that could reactivate the property market at a time when transactions are falling. Authorities investigated but found no policy violations.
"Domestic banks in Shanghai are strictly following the policies in their mortgage lending to second-home buyers," the CBRC's Shanghai office said. "No relaxation of the standards was found."
But the regulator is monitoring the situation, warning banks of potential risks in a liquidity-driven property boom.
It said most banks have adjusted their mortgage lending, distinguishing between genuine homebuyers and speculators.
All the scumbags from New Century, Countrywide, and all the other subprime boiler rooms can go over there and wreck their economy too. Please by all means. Go work your magic in China.
New Century is gone, and Countrywide is hanging on until it’s bought out by Bank of America.
Actually, housing prices have started to fall in China also. The article is a bit behind the times.
“The statement is a response to recent media reports that domestic banks were lowering lending standards to second-home buyers to boost mortgages, which bring a large share of bank profits.”
Guess they didn’t learn anything from the US mortgage crisis.
When my wife and I left China, she was making about 7,000 rmb /month as the top sales agent in her company. In August of 2007 she told me the worst agent in the company was making 10,000 rmb / month due to the housing boom in the private sector.
It has cooled a little compared to then, but the housing market is still pretty hot. Of course, the Sichuan province is now the focus of economic development for the Southwest.
The whole economy has been overheated for what, 15 years now. Amazing there has not been more inflation but then I am no economist.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.