Banks in Guangzhou, Shenzhen Reportedly Suspend New Mortgages as Regulators Tighten Restrictions on Property Loans

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Banks operating in the Guangdong province capital of Guangzhou have reportedly suspended the provision of new mortgages following the imposition of caps on real estate-related lending by the Chinese central bank.

On 24 January an online report circulated via Weibo claimed that Guangzhou had launched a new policy capping the ratio of personal home loans to all bank loans at less than the full year average for the city in 2020.

According to the report monthly personal home loans will also be capped at the average for the final quarter of 2020, and in response to the new policy banks in Guangzhou have “temporarily suspended handling of new loan applications.”

A report from 21st Century Business Herald indicates that a number of banks in Shenzhen as well as Guangzhou have suspended new mortgage loans.

These include China Merchants Bank, China Everbright Bank and Guangfa Bank, that launched the suspensions before the start of the week.

The development arrives following the launch of new regulations by the Chinese central bank at the start of 2021, that put caps on the real estate lending and mortgage lending ratios of domestic lenders.

Under the new “banking sector financial institution real estate loan concentration management system” (银行业金融机构房地产贷款集中度管理制度) personal mortgages are capped at 32.5% of all loans made by large-scale Chinese banks, while for medium-sized banks such as municipal lenders the ceiling is 20%,

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