In addition to rising interest rates, an increase in the time required for Chinese home buyers to secure loans from banks promises to put further pressure on the urban property market.
Rong 360’s latest “2017 July China Housing Loan Market Monthly Analysis Report” (2017年7月中国房贷市场月度分析报告) indicates that the average first home lending rate in China was 4.99% last month, or 1.02 times the benchmark rate.
This rate marks a year-on-year increase of 12.38%, as well as a 2.25% increase compared to the preceding month, with regulators reportedly pushing for gains in first home loan rates in order to curb this misuse for speculative investment purposes.
The average second home loan rate in China was 5.47% in July, for a year-on-year increase of 1.48%.
In addition to contending with steeper interest rates, home buyers in China are also finding it more difficult to enter the property market because of increases in the amount of time they need to wait before obtaining their loans.
According to 21st Century Business Herald personal loan managers from multiple banks are reporting that their clients need to wait at least three months before funds are released.
One executive from a China Merchants Bank branch told the paper that it would take at least until the end of year for a client to obtain a loan were he or she to commence application procedures at present.
Rate hikes set to vary by city
Future rate increases are set to vary depending on both city and specific branch with multiple banks in Beijing telling 21st Century that there has been no centralised adjustment to home loan policies, nor notices issued from the authorities requesting on going rate hikes.
A small number of bank branches plan on raising first home rates to 5 % to 15% above the benchmark rate, but this is not a distinct or unified trend throughout the capital.
While there little sign of ongoing rises in first home buyer rates, second home buyer rates are rising markedly, with banks reporting that a 20% premium against the base rate is the the bare minimum.
At the other end of the country in the Guangdong province capital of Guangzhou, however, major state-owned banks including the Agricultural Bank of China, Bank of China Bank of Communications and China Construction Bank have raised their home loan rates in unison, with the minimum rate for first home buyers rising to 1.05 times the base rate, and the minimum rate for second home purchases to 1.1 times the base rate.