[photopress:morehomes5.JPG,full,alignright]Commercial banks in Shanghai are lowering their mortgage lending interest rates for genuine homebuyers in a bid to minimize the impact of Saturday’s rate rise. Genuine homebuyers, or those purchasing an apartment for the first time, are precious customers for banks. This as opposed to speculators who are facing stronger regulation.
Last week, the China Banking Regulatory Commission issued a nine-point directive requiring lenders and other financial institutions to tighten their mortgage lending policies toward risky customers including potential speculators and property developers.
To attract customers, the Industrial and Commercial Bank of China, the country’s largest lender, took the lead to give first homebuyers a 15 percent discount on their mortgage lending interest rate. (At least, that seems to be the case in Beijing. But an ICBC employee in Shanghai said the branch in the city was still offering the 10 percent reduction.)
The Bank of China has also begun offering the 15 percent discount to those buying their first or second apartment. An official said, ‘We have restrictions on people who intend to buy a second-hand unit, including its location, the year it was built and its area. But we generally offer a 15 percent discount to the interest rate to new buyers.
An official with the Agricultural Bank of China, said, ‘Since the State Council issued the six-point decree, turnover on the property market has been falling, which directly led to a shrinking mortgage loan business for banks. Now every bank is scrambling to attract customers.’
A few banks in Beijing, including the local branches of the Agricultural Bank of China and China Construction Bank, are ready to launch fixed interest rate mortgage lending which eliminates the risks of the interest being raised.
Source: China Daily.