Banks in Beijing raise mortgage rates further to cool property market

People fish on the bank of a canal in front of apartment blocks in Beijing, February 27, 2017.[Photo/VCG]

Some banks in Beijing have started to raise mortgage rates further for first-time home buyers, The Beijing News reported on Tuesday, the latest move to cool down the red-hot property market.

Effective Monday, China Minsheng Bank, China's biggest private bank, adjusted mortgage rates to 10 percent above the benchmark mortgage rate for first-time home buyers in Beijing. For second-time home buyers, the policy remains the same and they have to pay 20 percent above the benchmark rate.

That came a month after eight banks, including the "Big Four", CITIC Bank and Beijing Bank, moved to raise mortgage rates to the official benchmark rate in Beijing.

Last year, banks in Beijing used to offer mortgage rates at 85 percent of official benchmark rates but raised to 90 percent at the start of this year and further raised to 95 percent of the benckmark rates. 

The current one-year benchmark lending rate set by the People's Bank of China is at 4.35 percent, the lending rate for loans up to five years is at 4.75 percent and loans longer than 5 years is at 4.9 percent.

For Beijing, one of the cities with the most stringent property control, tightened credit measures came the earliest, also the most obvious, said Zhang Dawei, an analyst with Centaline Property.

He also predicted that in the future, lenders are expected to tighten credit quota further and raise the price of property lending.

Since October last year, the government has implemented a slew of measures to cool growth in housing prices, including restrictions on home purchases and increased minimum down payment requirements.

According to the National Bureau of Statistics, of the 70 large and medium-sized cities surveyed, 30 cities witnessed a slower price rise year on year in April, up from 24 in March.