BEIJING: China's Big Four state-owned banks have reduced discounts on mortgage rates for owner-occupiers and are requiring higher down payments, in the latest sign of regulators' determination to cool soaring property prices, local media reported on Tuesday (April 13).
The stiffer rules also apply to people buying property they do not intend to live in, the official Financial News reported.
Bank of Communications, China's fifth-largest lender, is considering scrapping discounts on mortgage rates for second homes, the Beijing News reported separately, quoting an unnamed executive at the bank.
The newspaper also said that Bank of China is currently charging 10% on top of benchmark lending rates for mortgages for second homes.
The moves follow a recent warning by China's top banking regulator, Liu Mingkang, who warned banks at the weekend not to lend to property speculators and to strengthen their risk assessment of mortgages.
Chinese lenders started rolling back mortgage discounts earlier this year after regulators sought to prevent a property bubble from forming.
Previously, banks were offering a 30% discount on mortgage rates, in line with government policies introduced in late 2008 during the financial crisis to support the property sector and stimulate domestic consumption.
The China Banking Regulatory Commission (CBRC) requires a minimum down payment of 40% of the value of the property for second-home buyers, while first-time owner-occupiers taking out a mortgage need a down payment of only 20%.
But the CBRC recently urged banks to increase rates and down payments according to their assessment of the credit risk.
Property prices in 70 major cities rose 10.7% in the year to February. They rose 9.5% in the year to January. -- Reuters