Banks mull new lending rules for home buyers

Chinese banks are accelerating plans to carry out new lending rules, paving the way for second home buyers, said the Beijing News on Thursday.

China Merchants Bank implemented the new rules on Wednesday, while other banks, including Industrial and Commercial Bank of China, Bank of China and China Construction Bank, told the News that similar plans are under discussion.

Chinese citizens who wish to buy a second home can enjoy the same 30 percent down payment required of first-time home buyers if they have no outstanding mortgage, said the People's Bank of China, the central bank, and the China Banking Regulatory Commission in a joint announcement on Sept 30.

Prior to the announcement, second home buyers were required to place a minimum of 60 percent down payment.

Moreover, the mortgage rate can be adjusted to as low as 70 percent of the benchmark rate in order to boost the sluggish housing demand, according to the announcement.

But unlike lowering the down payment requirement, chances for an upper-limit mortgage discount are slim, said the Beijing News quoting industry insiders, adding that a 10 percent discount will be a more rational expectation as cost for luring new deposits is still relatively high.

Recent easing has marked a turning point in the nation's restrictive home purchasing policies as only five out of the 46 Chinese cities, namely Beijing, Shanghai, Guangzhou, Shenzhen and Sanya, still impose home purchase limit, a measure taken in 2011 to cool off the then heated property market.

The new rules are aimed at reversing a cooling trend in the market as more cities reported month-on-month price drops in August. Government data showed out of 70 major Chinese cities, new homes in 68 saw month-on-month price decline in August, compared with 64 in July.

Some real estate developers are mourning the missed opportunity of not acquiring more land as the market shows signs of recovery amid the easing, according to the China Business News on Wednesday.

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