China targets third mortgages in bid to rein in property prices

Beijing has told banks to clamp down on third mortgages by raising interest rates and demanding larger down payments, Bloomberg reported, citing a person with knowledge of the matter. The banking regulator also warned lenders about "hot money" entering the property market and told them to stop granting loans to developers found to be hoarding land or intentionally delaying property sales, the source said. Bank lending totaled US$1.4 trillion in 2009 and this has contributed to a sharp rise in property prices. According to the People’s Bank of China, US$139 billion was extended in home loans in the first nine months of 2009, a fourfold increase from a year earlier. Despite banks being ordered to set aside larger proportions of their reserves in January, lending for the month came to US$235 billion in new loans in January, matching the pace of credit growth seen in the same period of last year, China Daily reported, citing Economic Information Daily.