(Ecns.cn) -- The "Big Five" banks have all withdrawn favorable first-home loans in Beijing this month. Similar actions have also been taken in major cities such as Guangzhou, Shanghai and Tianjin.
According to a report by the China Securities Journal on August 9, the Big Five banks, including the Industrial and Commercial Bank of China (ICBC), the Agricultural Bank of China (ABC), the Bank of China (BOC), the China Construction Bank (CCB) and the Bank of Communications, have all made loans much tougher for first-home buyers.
Beijing banks tighten loan policies
Apart from the Big Five, most other banks have also followed the trend and withdrawn favorable first-home loans in Beijing. An insider revealed that only Citibank still offers a discount of 15% on first-home loans, while the China Citic Bank and the Hua Xia Bank both offer a discount of 5% on mortgages.
The China Securities Journal further revealed that banks have all tightened their grip on their wallets. A manager at a state-owned bank told the newspaper that all banks have been controlling credit growth in a stringent manner, especially the last three days of July. "During the last three days we cut down about 60% of the new lending in July, reducing the growth from 400 million yuan ($61.84 million) to 100 million yuan ($15.46 million)."
A staff member at a shareholding bank agreed that bank loan resources were strained in July and August, and that many banks have even stopped offering housing loans. They believe that the discounts made the lending business less profitable, though the risk was still controllable.
In addition, several commercial banks in many second- and third-tier cities have suspended individual housing loans. Although some banks still offer limited credit resources, they are asking would-be homeowners to provide a certificate of deposit or to deposit 300,000 to 500,000 yuan ($46,380 to $77,300).
Compared to first-home loans, it is much tougher to apply for loans for second homes. At present, down payments for second home mortgages have reached 60%, with interest rates 10% to 30% higher than the base mortgage rate.
Moreover, the China Banking Regulatory Commission (CBRC) has suggested that commercial banks should suspend their third-home mortgage businesses in Beijing, Shanghai, Shenzhen and Hangzhou. For other regions, commercial banks are asking buyers third houses to pay 60% as down payment and interest rates 50% higher than the base mortgage rate.
