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April 5, 2011

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Mortgages from public fund plunge nearly 47%

MORTGAGES extended by Shanghai's public housing fund plunged by nearly 47 percent last year, following government measures to rein in soaring home prices.

The Shanghai Provident Fund Management Center, the city's public housing fund manager, reported on Sunday that it lent a total of 30.29 billion yuan (US$4.62 billion) in housing loans in 2010, a year-on-year decrease of 46.5 percent.

Houses totaling 8.13 million square meters were covered by those loans.

Meanwhile, the number of borrowers from the public housing fund fell 46.9 percent during the same period to 99,600 households.

As of December, more than 4.07 million people had been covered by the city's public housing fund program, an increase of 363,500 from the same time a year earlier, the center said.

The huge drop in loans extended by the center was primarily due to major policy changes in the period, as the central government stepped up measures to curb speculation in the overheated housing market.

The city's public housing fund manager announced in October that it would only extend loans to second-home buyers if the floor area of their first house divided by the number of family members is smaller than the local average. In addition, the second home must be "an ordinary home" - not a luxury property, the manager stipulated.

Loans for third or more homes were stopped.

Mortgages for decorating homes have also been suspended by the city's public housing fund since August.

In Shanghai, employees covered by the public housing fund system, which gives more favorable lending rates than commercial banks, pay 7 percent of their monthly salary to the fund, and their employers are required to contribute the same amount.


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