Beijing Banks charge higher rates

The requirement is for the buyers to pay at least 40 percent of the purchase price as initial down payment and the balance through a mortgage with an interest rate of 6.53 percent, a rate which is 1.1 times the standard lending rate.

The interest rate discount for first time buyers had gone up to 30 percent off the centrally determined benchmark lending rate which is set by the People’s Bank of China, the country’s central bank. The new rates are part of the central government?s attempt to control real estate speculation and lower excess liquidity.

China Banking Regulatory Commission, which regulates China’s banking industry, said again in June that banks must implement the 40 percent down payment requirement which was first announced on Sept 27 in 2007. However, banks were given until July to set their own loan interest rates.

China’s Big Four banks, — China Industrial and Commercial Bank, Bank of China, China Construction Bank, and Agricultural Bank of China — have strictly followed the Sept 27 requirement, and other banks are following their lead, according to insiders of the real estate industry.

However, according to the Shanghai Youth newspaper, some banks are not following the new rules and continue lending at lower rates in Shanghai, which local regulators denied.

Source : Konaxis

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