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Second-home safety net widens
By Cao Qian |
April 23, 2010, Friday
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Print Edition
Print Edition
CHINA'S banking regulators have ordered the nation's financial institutions to adopt stricter standards in determining whether a house is a "second home" before approving mortgage loans.
Banks should consult the housing registry to see how many homes a family owned, instead of tracking an individual household's lending record, according to Yang Jiacai, a division chief at the supervision department of the China Banking Regulatory Commission.
Whether mortgages were paid off or not should not affect how a second home was defined, Yang said.
Most banks define a second home whether or not the mortgage on the first propertyhas been paid off.
But some lenders show leniency as they define a mortgage as for a first home even if the mortgage on the previous house has been paid.
Yang made the revelation on China Central Television on Wednesday.
"The new standard, the latest signal from the central government to show its determination to rein in property speculation, will further curb demand if strictly implemented," said Shao Minghao, a research head at Shanghai Hanyu Property Consulting.
"One major problem in adopting this new standard is that the country's housing registry system is fragmented so it might be hard for banks to determine whether a family already owns a home."
Song Huiyong, a research director at Shanghai Centaline Property Consultants, agreed that the move would have a great influence on the housing market if strictly policed.
Only families with no record at the housing registry would be regarded as first-time buyers, Song said.
A more detailed and clearer explanation by the watchdog was needed, he said.
Industry experts said it was unclear whether a family would still be regarded as a first-time buyer if it sold the only house it owned before buying a new property.
China over the past week has introduced measures to cool down the country's overheated housing market.
On April 15, the government raised the down-payment requirement on second-home mortgages to at least 50 percent from 40 percent and reiterated that an extra 10 percent should apply to interest rates for these homes.
Two days later, a notice by the State Council, the nation's Cabinet, was issued saying that banks could suspend housing credit to third or more home buyers in places where home prices rise too rapidly and too high, and home supplies are insufficient.
Banks have been asked to stop giving loans to people who haven't paid personal income tax or social security funds in the past 12 months in places where they seek to buy homes.
Local governments can now set a cap on the number of homes a buyer can own.
Banks should consult the housing registry to see how many homes a family owned, instead of tracking an individual household's lending record, according to Yang Jiacai, a division chief at the supervision department of the China Banking Regulatory Commission.
Whether mortgages were paid off or not should not affect how a second home was defined, Yang said.
Most banks define a second home whether or not the mortgage on the first propertyhas been paid off.
But some lenders show leniency as they define a mortgage as for a first home even if the mortgage on the previous house has been paid.
Yang made the revelation on China Central Television on Wednesday.
"The new standard, the latest signal from the central government to show its determination to rein in property speculation, will further curb demand if strictly implemented," said Shao Minghao, a research head at Shanghai Hanyu Property Consulting.
"One major problem in adopting this new standard is that the country's housing registry system is fragmented so it might be hard for banks to determine whether a family already owns a home."
Song Huiyong, a research director at Shanghai Centaline Property Consultants, agreed that the move would have a great influence on the housing market if strictly policed.
Only families with no record at the housing registry would be regarded as first-time buyers, Song said.
A more detailed and clearer explanation by the watchdog was needed, he said.
Industry experts said it was unclear whether a family would still be regarded as a first-time buyer if it sold the only house it owned before buying a new property.
China over the past week has introduced measures to cool down the country's overheated housing market.
On April 15, the government raised the down-payment requirement on second-home mortgages to at least 50 percent from 40 percent and reiterated that an extra 10 percent should apply to interest rates for these homes.
Two days later, a notice by the State Council, the nation's Cabinet, was issued saying that banks could suspend housing credit to third or more home buyers in places where home prices rise too rapidly and too high, and home supplies are insufficient.
Banks have been asked to stop giving loans to people who haven't paid personal income tax or social security funds in the past 12 months in places where they seek to buy homes.
Local governments can now set a cap on the number of homes a buyer can own.
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