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Bigger mortgages for buyers of city homes
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SHANGHAI is to raise the amount of money people can borrow from the city’s housing fund program in a bid to stimulate the property market.
From next Wednesday, first-time buyers will be able to borrow up to a million yuan (US$161,000) as will buyers of second homes that the city government classifies as “ordinary.”
To qualify in either case, two people will have to be responsible for the repayments, the Shanghai Provident Fund Management Center said on its website.
Previously, the ceiling was set at 600,000 yuan.
Families with an extra funding account, provided by some employers, will be able to borrow up to 1.2 million yuan.
Where only one person covers repayments, the ceiling will be raised from 300,000 yuan to 500,000 yuan with a maximum loan of 600,000 yuan if there is an extra funding account.
For buyers of second homes defined as “non-ordinary,” or larger properties, the mortgage ceiling will be raised from 400,000 yuan to 800,000 yuan where two people cover the repayments and from 200,000 yuan to 400,000 yuan for singles.
“The latest batch of policies will have a very positive impact on the local residential market as they are going to benefit almost all kinds of buyers, whether budget-conscious first-time buyers or those seeking homes for upgrading purposes,” said Lu Qilin, a researcher at Shanghai Deovolente Realty Co. “The policy we are employing at the moment in the city went effective in September 2007, so it’s time to give it some adjustment since property prices have jumped since then.”
In 2007, the average cost of a new home stood at 1.33 million yuan in Shanghai, but last year it soared to 3.24 million yuan, according to Deovolente.
Yesterday’s statement follows a central government announcement that it would be loosening mortgage policies.
The minimum down payment for second-home buyers will be reduced to 40 percent from the previous 60-70 percent, the People’s Bank of China, the Ministry of Housing and Urban-Rural Development and the China Banking Regulatory Commission said in a joint statement on March 30.
First-time buyers who use housing funds will have to pay a minimum 20 percent as a down payment, down from the previous 30 percent.
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