[photopress:real_estate_shanghai_housing.jpg,full,alignright]The new controls are rules and recommendations. The result of the rules may well be an increase in down payments and interest rates for people who hold more than one mortgage. The recommendations are pressure on the banks to set their own rules when it comes to granting mortgages. The slogan seems to be: ‘Just say no.’
The new mortgage requirements were announced by the People’s Bank of China and the China Banking Regulatory Commission.
Mortgage holders who apply for another home loan must produce a down payment of at least 40% and pay a 10% premium on their interest rate.
A third or fourth property mortgage means that the down payment requirement and interest rate will be even higher although these rules will be set by the banks. Some of banks have stopped granting new mortgages until they sort it out.
One of the problems will be identifying people who are taking out a second, third or more mortgage. For instance, a wife can apply for a mortgage under her name with her husband’s name on the mortgage for the couple’s first property.
Source: Shanghai Daily