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ICBC, CCB Deny Report That They Resumed Third-Home Mortgages in Shanghai
Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd. denied a newspaper report that they resumed third-home mortgages in Shanghai.
The companies are complying with a government order to freeze lending for such purchases, spokespeople for the three banks’ Shanghai branches said in interviews. Some Shanghai-based commercial banks have resumed lending for third-home purchases and eased policies for second-home buyers, the Oriental Morning Post reported yesterday, citing people it didn’t identify.
China’s State Council on April 15 announced measures to crack down on speculative property purchases, including requiring a 50 percent down-payment and 1.1 times the benchmark rate for second homes, and a ban on third mortgages. Real-estate prices jumped 12.4 percent across 70 cities in May, the second- fastest pace on record, heightening concern a bubble is forming.
Construction Bank started taking applications for third- home mortgages from borrowers with high credit ratings this week, though none have been approved, said an executive at the lender’s Shanghai branch who declined to be identified.
ICBC required down-payments of 60 percent and imposed interest rates of 20 percent more than the benchmark on applications for third-home loans, the Oriental Morning Post said. Construction Bank required 50 percent as a down-payment, according to the report.
The government plans to introduce additional measures in the third quarter to strengthen enforcement of existing real estate policies, the 21st Century Business Herald reported on July 6, citing a person it didn’t name.
Sales of new homes in Shanghai fell 57 percent in the first six months to a five-year low following the government’s measures to cool the property market, Shanghai Uwin Real Estate Information Services Co. said this week. An index tracking stocks of 34 Shanghai-listed developers dropped 27 percent in 2010, even as home prices kept rising.
--Luo Jun. Editors: Chitra Somayaji, Joost Akkermans
To contact Bloomberg News staff of this story: Luo Jun in Shanghai at +8621-6104-7021 or jluo6@bloomberg.net
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