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Thursday, July 14, 2016, 16:57

Shenzhen banks ordered to raise first-time mortgage rate

By Zhou Mo
Shenzhen banks ordered to raise first-time mortgage rate

A man (right ) reads a newspaper as an other one looks at the city's skyline in Shenzhen, Jan 31, 2007. (AFP PHOTO/Philippe LOPEZ)

SHENZHEN - Shenzhen banks have tightened loans for first-time home buyers as the city's property market shows sign of warming up – but industry insiders say the move has more symbolic meaning than real effect.

Seven banks in Shenzhen, including Bank of China, Industrial and Commercial Bank of China and China Minsheng Bank, have been ordered to raise their loan interest rate to 90 percent of the current benchmark rate since Thursday, from the previous 88 percent.

A bank manager at Bao'an branch of China Construction Bank said they received the notification on Monday and were asked to implement the new policy three days later. The order came suddenly, the manager said.

Song Ding, director of the Tourism and Real Estate Industry Research Center at Shenzhen-based think tank China Development Institute, told China Daily that the move has more symbolic meaning than real effect.

"The adjustment is small and will not make much change from a financial aspect," he said.

There are recent signs that Shenzhen's housing market is again warming up after several months of bleak performance since the government introduced housing restrictions to rein in the overheated market in late March, Song said.

Hot sales of luxury houses and record high sales prices of several pieces of land have lifted investors' confidence in the city's property market, he said.

"From the policy level, the latest move to tighten loans reveals a signal that the government is not willing to let the housing market go through another round of frenzy," Song said.

The average price for new homes in Shenzhen soared to over 61,756 yuan (HK$71,615) per square meter in June, surging 101 percent year-on-year, according to Shenzhen Centaline Property.

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