Chinese Mandarin - Housing credit policy to be adjusted

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Housing credit policy to be adjusted

www.chinanews.cn 2005-03-17 14:47:20

Chinanews, Beijing, March 16 (By Weng Yang) - The People's Bank of China
has decided to carry out two adjustments to the self-employed personal
housing credit policy of commercial banks on Mar 17th, 2005. It also
lowered the deposit interest rate of excess capital reserves for
financial institutions to 0.99%, down from the current annual rate of
1.62%. The interest rate of legal capital reserves still remains at 1.89%.
The first adjustment will raise the lowest rate of initial payment in
personal housing loans to 30% from the current 20% in cities and regions
where housing prices increase too rapidly. There will be no uniform
degree of increase for these areas, but instead, commercial banks will
define initial payment rates according to statistics on regional housing
price fluctuations released by relevant national departments.
The second adjustment will unify the current housing prime and lending
rates, and implement a lower control limit. The lower limit on the
housing interest rate should be 90% of the benchmark rate for
corresponding loans. Commercial banks can independently define the
housing interest rate as well as internal pricing regulations according
to concrete conditions. Take, as an example, a more than five-year
personal housing loan: the lower limit of the housing interest rate
should be 90% of the benchmark lending rate, which is 6.12%. The result
is 5.51%, 0.2 percentage point higher than the current 5.31% prime rate.

E-mail: zhangqinghua@chinanews.com.cn Tel: 8610-88387443 Fax:
8610-68327649

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