Banks look to boost mortgage loans
(Shanghai Daily)
Updated: 2006-07-03 13:48 Chinese banks are diversifying products and services to rely less on interest
income and improve profits before foreign rivals will be allowed to start
yuan-denominated businesses in December.
Still, the central government's tightening policies, aimed at curbing torrid
investments and head off inflation, has put pressure on the banks. The policies
may curb demand for mortgages and slow a solid source of revenue.
The central government raised mortgage rates in April and also hiked the
minimum down payment for larger apartments in a move to halt speculative capital
and cool surging property prices.
The percentage of residents who are considering buying a home fell 0.6
percentage point to 17.6 percent in the second quarter from the previous
quarter, the People's Bank of China said, citing its survey among 20,000
respondents in 50 cities nationwide.
Although banks and regulators declined to provide figures concerning mortgage
loans, some lenders admitted a slowdown occurred and have taken steps to lure
customers.
Preferential policies include giving a 10 percent discount on interest rates
for first-time home buyers. They also let applications for mortgage loans be
based on household income rather than personal income if a family proves it will
live in the apartment.
"Mortgage loans still have rosy prospects because of China's red-hot economic
growth and bulging personal wealth," said Zhu Yan, a Bank of China manager.
"Lenders now want clients with low risk, especially those who want to buy an
apartment for a home."
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