HSK - Mortgage deposit for repeat buyers may rise

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Mortgage deposit for repeat buyers may rise
By Zhang Ran
Updated: 2007-09-13 07:07

The central bank is likely to ask commercial lenders to raise mortgage
deposits to at least 40 percent for homebuyers who intend to buy a second
apartment, a source said.

The central bank could release the new requirement later this week, the
source told China Daily yesterday.

"Homebuyers might have to make a down payment of at least 40 percent to
buy a second apartment," he said, adding that the move is an attempt to
curb speculation in the property market, which might be intensified by
rising inflation.

The minimum deposit for an apartment of more than 90 sq m is currently 30
percent, while for apartments less than 90 sq m it's 20 percent.

Food costs pushed up China's consumer price index by 6.5 percent in
August from a year earlier, the fastest growth rate since December 1996.
Rising inflation has put real interest rates for deposits in negative
territory, compared with the 3.6 percent one-year key deposit rate.

This has raised concerns that more individuals will channel their money
into the stock and property markets, fueling bubbles.

Property prices in 70 major cities jumped 8.2 percent in August from a
year earlier after gaining 7.5 percent in July, according to figures from
the National Development and Reform Commission.

Housing prices in Beijing rose 12.1 percent from a year earlier, while
prices in the southern boomtown of Shenzhen went up 20.8 percent.

Beihai, Shenzhen, Urumqi, Beijing and Bengbu of East China's Anhui
Province led the country in terms of price increases, with growth rates
of 18.2 percent, 17.6 percent, 15.5 percent, 13.5 percent and 11.1
percent.

(China Daily 09/13/2007 page13)

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