To tighten bank credit to real estate sector, China has issued new rules that stipulate that financial institutions shall not grant loans to projects whose developers fail to raise 35 per cent of the investment from their own resources.

The new policy, issued by the China Banking Regulatory Commission (CBRC), also tightens lending to developers who are suspected of acquiring land and property.

The Chinese government has for some time been trying to rein in rocketing property investment by tightening land and credit supply, without obvious success. The government is increasingly concerned that commercial banks might become the scapegoats if a real estate bubble were to burst.

For personal housing mortgage loans, the new policy suggests that banks will decide how much a borrower will have to put down based on their credit worthiness, instead of using a unified standard.

The CBRC said it would crack down on fraudulent mortgage loans, which have been employed by some developers to shift huge risks to banks. Earlier,CBRC chairman Liu Mingkang said the regulatory body will launch a review of mortgage loans and lending to land reserve projects.

Official statistics show that property investment totalled $118.08 billion in the first seven months this year, an increase of 24 per cent year-on-year. Vacant commodity houses reached 121 million square meters in floor space, up 17.2 per cent from last year.

Source:佚名