Shanghai, Tianjin raise down payment requirements for home buyers

Home buyers in Shanghai are now required to make mortgage down payments and pay additional interest on loans, while banks have been ordered to tighten their purse strings, as authorities move to rein in runaway house prices in the metropolis.

According to a notice jointly issued by Shanghai's housing and banking authorities, starting from Tuesday first-time home buyers will pay down payments of at least 35 percent, buyers of second houses will have to make 50 percent down payments, while buyers of commercial properties will pay 70 percent.

Meanwhile, banks have been ordered to raise interest rates by 10 percent for home buyers borrowing from the government's Housing Provident Fund (HPF) for a second time, with the maximum sum lowered by 100,000 yuan ($14,492). People who have two mortgages will be banned from accessing HPF loans.

Banks are also required to thoroughly check papers submitted by home buyers to guard against fabrication for speculative purposes. Home buyers will not be able to borrow if their monthly mortgage payment exceeds 40 percent of their salaries.

On Monday, the People's Bank of China Tianjin branch also said on its official website that it will implement diversified credit policies to cool a red-hot property market.

Under the new rules, for first-time home buyers the minimum down payment on a mortgage will be 30 percent, versus 20 percent earlier. Those who already own a house and have unpaid mortgages must make at least a 40-percent down payment when applying for commercial loans for second home.

For non-local residents who plan to buy their first house in Tianjin's six major districts and Wuqing district, the minimum down payment on a mortgage will be 40 percent.

The government's monthly housing price survey showed a cooling of the property sector in October, but many fear the slowing of prices will not last long as demand for land in first-tier cities remains strong.

Seven of 70 large and medium-sized cities surveyed in the second half of October saw new home prices drop month on month, up from two in the first half of the month, according to the National Bureau of Statistics (NBS).

In the second half of October, new residential property prices in Shenzhen and Chengdu continued to decline, while prices in Beijing, Tianjin, Shanghai, Xiamen and Zhengzhou reversed their upward trend and started declining, according to the NBS.

The NBS attributed the "significant changes" to policies rolled out by local governments to curb prices. In early October, dozens of Chinese cities announced measures, including purchase limits and tightened mortgage restrictions, to prevent prices rising too fast.

Xinhua contributed to this story.