Banks hike housing mortgage loan rates
2013-October-10 Source: Szdaily web edition
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Chinese banks in Shenzhen have raised mortgage loan rates for first-home buyers by up to 10 percent of the benchmark interest rate, according to yesterday's report by Shenzhen Economic Daily.

"When our clients applied for a mortgage loan from Bank of China's Shenzhen branch at the end of August, it was still possible to get a 10-percent discount. However, the discount was later reduced to 5 percent and then canceled," an employee of Zhonglian Real Estate, surnamed Xu, told Shenzhen Daily yesterday.

"Mortgage rates have been changing more frequently," said Xu, who has been helping clients of the company apply for mortgage loans for over 10 years.

The interest rate hike has been widely considered as a result of banks' tight credit line. People rushed to buy homes at the beginning of this year, consuming most of banks'yearly credit quotas.

The tight liquidity is expected to continue and may be relieved at the beginning of next year, the paper said, citing unidentified bank sources.

But some foreign banks in the city are still providing discounted rates, the paper said. Citibank offers a 10-percent discount for a loan of 1.5 million yuan (US$245,000). If the loan reaches 4 million yuan, a 15-percent discount is possible.

HSBC provides a 15-percent discount if a loan reaches a certain amount, the paper said, citing an unidentified customer manager of the bank's branch in central Futian District.

"The interest rate hike probably will not discourage people from buying home in a metropolis like Shenzhen, because many people like me believe home price increases will eventually dwarf the interest rate growth," said a Nanshan resident, surnamed Liu, who is planning to buy her second home with the help of a bank loan.

A total of 212 new homes were sold in Shenzhen during the seven-day National Day holiday. Although the number represents a 30-percent decline from the same period last year, the average price maintained a growth. Four of the seven days each saw an average trading price of more than 30,000 yuan per square meter, and the other three days each saw an average price of about 40,000 yuan, according to official statistics.

Supply of new homes is expected to increase after mid-October.

Editor: Jecey
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