Unproved report said China Banking Regulatory Commission has advised banks to stop mortgages to third home unit buyers in Beijing, Shanghai, Hangzhou and Shenzhen. For areas outside the above-mentioned cities, the banks can make their own decisions but the down payments have to be increased to 60%, with a 50% additional interest rate increase on top. The branches of the banks have also to report their third home unit loans to their headquarters. The report also said the Shanghai branch of CIBC (Hong Kong stock code 1398) has suspended mortgages for third homes this week.

According to a report in China in early July, some banks in Shanghai and Shenzhen were quietly relaxing mortgages to borrowers for third home units. Buying a third home unit is regarded as speculation in property in China.

The report also said China’s banking regulator has instructed the banks to test the impact of a fall in house prices of up to 50 percent in key cities where prices have risen sharply.

In early morning Wednesday, there was news by foreign reporters on China banking regulator ordering banks to conduct stress tests.

 

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