Banks Raise Home Lending Rates Across China

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Banks in major cities across China have further tightened lending to homebuyers as regulators strive to cool down the country’s overheating urban property market.

Chinese media reports indicate that multiple banks in Beijing, Shanghai and Guangzhou have lifted the rate for first time home loans by as much as 10 or even 20%.

According to Caijing one of China Minsheng Bank’s Shanghai branches recently announced that first-time home mortgage rates would be no less than 1.1 times the loan prime rate, while a China CITIC branch has raised their rate by 20%, equal to 1.2 times the LPR.

Beijing banks have raised their home loan rates for the fifth time this year, with The Beijing News reporting that local bank branches have also raised the floor for first time home loan rates to 1.1 times the LPR, and the rate for second home loans to 1.2 times the prime rate.

In the far south of the country Southern Metropolis reports that China Minsheng branches the Cantonese mega-city of Guangzhou discretely raised the the mortgage rate by 10% at the start of the month with China CITIC and Pudong Development also pushing through with similar policies.

Credit for home buyers is so tight in Guangzhou that borrowers need to wait in line for the more costly loans, or else agree to a rate hike of 20% in order to access funds in advance.

The consensus expectation amongst Chinese analysts is for home loans to continue declining as a proportion of new lending in China, as nationwide credit extension levels hold steady.

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