Four banks in Shenzhen raised mortgage interest rates for customers who are borrowing money to buy their first apartments, Shenzhen Economic Daily reported yesterday.
The Shenzhen branches of Bank of China, China Construction Bank, China Merchants Bank and the Postal Savings Bank of China now have mortgage rates 2 percent higher than before.
Experts say the mortgage rate hike is in response to the skyrocketing housing prices in recent months in Shenzhen.
According to the National Bureau of Statistics, home prices in Shenzhen led the growth rate over the past five months in the country. For example, the average price of new homes in Nanshan District reached a city record high of 61,398 yuan (US$9,903) per square meter. New homes selling for more than 100,000 yuan per square meter are now seen in some area like Yantian and Shekou.
In addition, many new homes were reportedly sold out in a few hours after they were released onto the market. The official data by the city’s urban planning, land and resources commission showed that the total trading volume of homes in May also set a new record. The monthly turnover has jumped by 50 percent compared to April, close to a historical peak set in 2009.
Mortgage rates for second-home buyers remain unchanged. To buy a second home in Shenzhen, the lowest down payment is 70 percent of the total price, while the down payment for second homes in many other cities has been reduced to only 40 percent.
Additionally, many banks are also extending the approval procedure for loan applications.
“The banks have to raise the bar because the housing market is very hot at the moment in the city and the banks need more time to process each loan application,” said a manager named Wang Qing from a real estate agency.
The alteration of the interest rate will increase the financial burden for first-time homebuyers.
“The cost of buying an apartment in Shenzhen keeps increasing,” said a local resident surnamed Xu.