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Bank of East Asia offers low down payment mortgage

2015-June-18       Source: Szdaily.com

The Shenzhen branch of the Bank of East Asia became the first bank in Shenzhen to offer mortgages to second-time homebuyers requiring a down payment of only 40 percent, Shenzhen Economic Daily reported yesterday.

The Shenzhen branch of the Bank of East Asia became the first bank in Shenzhen to offer mortgages to second-time homebuyers requiring a down payment of only 40 percent, Shenzhen Economic Daily reported yesterday.

The offer came more than two months after national authorities lowered the requirement of the down payment for second homes to 40 percent.

Currently, the requirement for down payments for second homes in Shenzhen remains at 70 percent.

The Hong Kong-headquartered bank adopted the new policy June 11, but it has not approved a single mortgage application of this kind due to its stringent requirements, the Daily said in the report.

According to a manager with the mortgage department of the Bank of East Asia in Shenzhen, surnamed Zhou, an applicant must prove that their income is twice the amount of their monthly mortgage payment. The applicant must also buy a financial management product worth at least 50,000 yuan (US$8,065) issued by the bank to qualify.

"The bank is very cautious about issuing a mortgage considering the requirements for a loan with a 40 percent down payment are very high," said Xiao Xiaoping, general manager with the pre-owned housing research center with Zhonglian-Lianjia Real Estate.

"The requirement of such a monthly income will disqualify many potential homebuyers," said Wang Qing, general manager of the property transaction management department with Midland Realty.

Wang said that the 40-percent down payment by the Bank of East Asia is an individual case.

"The bank's market share in the mortgage business is limited, so it is unlikely that it will have much impact on the market. And I don't think other banks will follow suit," Wang said.

Xiao said the move by the Bank of East Asia is likely to attract market attention, paving the way for the bank to expand its mortgage business.

The real estate market in the city has been hot in recent months with both home prices reaching record highs and transaction volume closing in on a historical high set in 2009.

Four domestic banks recently increase mortgage rates for first-time homebuyers by 2 percent, hoping to restrict demand.

Many banks are also extending the approval periods for mortgage applications from one week to two weeks, the Daily said.

Editor: Chan

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