The latest data from Rong 360 points to ongoing gains in interest rates for first home buyer loans across China, as regulators endeavour to stymie any bubbles in urban real estate markets.
Rong 360’s data indicates that out of the 533 Chinese banks surveyed only 4 provide a 90% discount rate as compared to 11 in June, while 15 provide a 95% discount, for a decline of 48 compared to the previous month.
Raising rates for housing loans has become a necessity for many banks, as China’s ongoing deleveraging campaign constricts liquidity, and rising capital costs in tandem with declining returns undermines their revenues.
Consequently some market observers expect housing loans to continue to ride high, with first-home buyer rates potentially breaching the 5.00% threshold in first-tier cities, and putting further pressure on prices.
“The restraining role on property prices of the continual tightening of property loans in combination with real estate adjustment policies has become more pronounced,” said Zhang Dawei, chief analyst of Centaline Property Agency to The Beijing Daily.
“Loans are the most important factor for determining short-term real estate prices, and we predict that in the second half overall property data will see year-on-year declines.”