Shanghai banks to ease lending for home buyers

The Shanghai branches of some banks said they are planning to relax housing loan measures to home buyers who have no outstanding mortgages.

The branches of the Agricultural Bank of China, the Industrial Bank, Shanghai Pudong Development Bank, and China Construction Bank said they have received notices to relax mortgage policies, bank sources and customer service staff said yesterday.

A source with AgBank confirmed the lender may offer a benchmark lending rate to buyers who have paid off their mortgages and now don't have a home registered under their names in Shanghai.

These buyers were previously not seen as first-home buyers and had to pay higher rates or not eligible to get mortgages from banks.

The original rule stated that a buyer of a second home, with or without a mortgage, was subject to a 70 percent minimum down payment and had to pay a mortgage rate of 10 percent or more above the benchmark lending rate.

The minimum down payment required for first-home buyers is 30 percent.

Meanwhile, 21st Century Business Herald reported yesterday, citing unidentified sources, that China's four biggest state-owned banks would ease mortgage lending across the country in a move orchestrated by regulators.

Shanghai Securities News also said one of the banks would cut mortgage interest rates for first-home buyers by 30 percent, and also ease lending policies for those buying a second home.

The reports followed the official relaxation of mortgage rules in Fuzhou, capital of Fujian Province, on Monday. Buyers who have paid their outstanding mortgages will be considered first-home purchasers and pay the lowest possible down payment and mortgage rates set by regulators, the city's government said in a statement.

Wang Tao, chief China economist of UBS, said the mortgage rules may be potentially relaxed across China as the government attempts to boost the property sector that is clouding the country's economic recovery.