BIZCHINA> Recent Adjustments
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BIZCHINA> Recent Adjustments
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Banks tighten grip on property loans, 03/2005
By Zhang Dingmin (China Daily)
Updated: 2005-03-17 05:54 China's central bank announced measures to tighten property loans yesterday, in a further sign of concern about a property bubble. The People'sBank of China(PBOC) also reduced the interest rate on banks' excess reserves a move analysts say is aimed at alleviating liquidity difficulties among businesses. Starting today, commercial banks are barred from lowering interest rates on consumer housing loans to below 0.9 per cent of the PBOC's benchmark rates. That brings the upper limit of interest rates on loans longer than five years up by 20 basis points to 5.51 per cent, the central bank said. It also allows commercial banks to raise down payments from 20 per cent to 30 per cent in cities where the lenders believe property prices have been rising "too fast." "That means it has become the decision-makers' unuttered view that there has been property bubbles in some cities," said Wang Songqi, deputy director of the Finance Research Institute under the Chinese Academy of Social Sciences. "Although the measures are only a moderate tightening, they sent a signal to the market," he added. China's property prices rose rapidly during the past year or so, and have long prompted worries among some analysts and government officials about a property bubble although many hold the growing trend of urbanization is delivering substantial support to the industry. (For more biz stories, please visit Industries)
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