SOME banks in Shanghai are offering preferential mortgage interest rates for buyers of first homes, taking their cue from the Chinese central bank which encourages the practice.

HSBC, the biggest overseas bank in China, offers a 10 percent discount on the benchmark interest rate for qualified first-home buyers. Citigroup also offers a 10 percent discount on the rate for first-home buyers but does not guarantee it for all applicants, the bank said yesterday.

The benchmark interest rate is 7.05 percent on housing loans of five years and above.

Standard Chartered Bank does not provide any rate discount as personal housing loans are not its core business, a loan officer of the lender said yesterday.

Another smaller foreign bank told Shanghai Daily that it also does not offer the discount as it needs to manage prudently the regulatory loan-to-deposit ratio requirement. Also, its mortgage business is limited by a relatively lower loan quota compared with that given to other bigger lenders.

Liu Shiyu, vice governor of the People's Bank of China, said at the recent annual sessions of China's top legislature in Beijing that the commercial banks are encouraged to offer interest rate discounts to first-home buyers.

The Bank of Communications and the Agricultural Bank of China offer the maximum 15 percent discount available in the market.

A Shanghai-based source at BoCom told Shanghai Daily yesterday that it offers the maximum 15 percent discount to VIP clients.

Source:shanghaidaily.com