Banks adjust interest rates
As early as February 25, 2011, many Chinese banks, including the Guangdong Development Bank (GDB), CCB and BOC, all withdrew favorable first-home loans and changed mortgage rates back to the base standard in Guangzhou. In regard to the application for second-home loans, the interest rate was 10% higher than the base mortgage rate or even above.
By August 8, some foreign banks were still offering a 10% discount on first-home loans, but loan applicant qualification was strictly regulated.
In Shanghai, the BOC, the Bank of Agriculture and Commerce (SRCB), the Bank of Communication, ICBC, CCB and the China Merchants Bank (CMBC) adjusted their interest rates on first-home loans to the base mortgage rate, while the Industrial Bank increased its interest rate 5% to 10% higher than the base rate.
It was reported on August 5 that Shanghai's foreign banks still offer a 10% discount on first-home loans, and persons such as public servants and teachers can enjoy a discount up to 25%. However, foreign banks do not accept housing provident fund loans and maintain a higher mortgage repayment threshold.
Tianjin's mortgage policy is in accordance with national regulations. Most banks there accept 30% down payments for first-house mortgages. For second-home loans, the down payments must be higher than 60% and the interest rate is 10% higher than the base mortgage rate. Though there are still favorable mortgage policies in Tianjin, they are gradually being adjusted.
Credit tightening creates 'loan waiters'
Under the pressure of control policies and credit tightening, home-buyers in many cities are complaining that despite successful screening of their loan applications they have to wait for the money. This phenomenon is called "loan waiting."
Mr. Mao, a house-buyer in Zhengzhou, capital of Henan Province, said he was a mortgage slave-to-be, because he had waited three months since applying for a housing loan, but had yet to receive financing.
Mao is a businessman selling vegetables. Last April, he took out savings of about 200,000 yuan ($61,840) and also borrowed money from his relatives for the down payment on a second-hand apartment. Waiting for the loan has been torturous, he said, because he knew he would be confronted with interest rate hikes, even if the bank began lending.
Many people are facing the same situation as credit tightening prolongs the approval cycle. Although it is a side effect of the national control policy, the measures are essential to ease inflation and mitigate housing price hikes.
