China raises down-payments, mortgage rates
cctv.com 03-17-2005 10:37
China is making fresh efforts to cool down the local real estate sector.
The central bank on Wednesday announced it would allow banks to demand bigger down-payments and charge higher rates on mortgages.
The People's Bank of China, the country's central bank, said it would cancel the discount interest rates on mortgages, effective Thursday. The bottom level of adjusted mortgage rates will be 90 percent of the benchmark interest rate. And commercial banks in some cities can demand down-payments of 30 percent, up from the previous 20 percent. The central bank says, the new policy will apply "in cities and regions where property prices have been rising too rapidly".
Yao Zhizhong, Chinese Academy of Social Sciences, said, "The move is necessary to curb demand in the real estate market. Higher interest rates increase the cost of buying a home, and the increase in down-payments will lift threshold to buy a home. This will have a direct impact on rapid increase in housing prices in some cities."
The news came on the same day that fixed-asset investment data showed higher-than-expected annual growth in the first two months of the year. Fixed-asset investment in January-February was 24.5 percent higher than a year earlier, with real estate investment up 27 percent year-on-year.
Meanwhile, the central bank also cut down the interest rates paid on excess bank reserves to 0.99 percent, from the current 1.62 percent. Insiders say this will help commercial banks to improve capital efficiency and will help promote a market-oriented interest rate system.
Editor:Chen Zhuo Source:CCTV.com