(ECNS) -- Commercial banks will not stop issuing mortgage loans for property purchases on a large scale, Chinese media reported, although some banks have stopped the service after running out of credit this year.
About 20 banks, out of a total of 533, were reported to have suspended mortgage loans, and the number was expected to increase as China continues control over the real estate market.
However, most banks would not follow the move. "We did not stop mortgage loans. Interest rates did not change either," a manager with a commercial bank told the Chutian Metro Daily in Hubei Province. "Some banks have stopped the business because they have run out their line of credit this year," he added.
"The watchdog has urged banks to keep a balance on issuing loans, but some banks ran out their credit ahead of schedule. So, they have had to stop issuing mortgage loans."
According to some industry insiders, it was a general trend to control the increase of banks' mortgage loans, but a large-scale halt on such loans would not happen. Still, it would become more difficult for homebuyers to get loans in the future.
Rocketing housing prices, especially in major cities, had fueled concerns about bubbles. China's policymakers announced in December that "houses are for living in, not for speculation". Since the end of 2016, dozens of local governments have passed or expanded restrictions on house purchases and increased the minimum down payment required for a mortgage. The market boom was also cooled by relatively tightening liquidity conditions as China moved to contain leverage.
Some commercial banks in China's first-tier cities, including Beijing, Shanghai and Shenzhen, hiked interest rates for mortgage loans. According to statistics from Rong360.com, a financial information provider, the average interest rate for a first home mortgage was 4.73 percent in May, up 4.64 percent compared with the previous month.