FIRST-TIME home buyers in China who apply to the public housing fund could be expected to put down a deposit of 30 percent, under a new government notice.

If the home is 90 square metres or less, the new buyer should provide a down- payment of at least 20 percent, according to a statement posted yesterday on the website of the Ministry of Housing and Urban-Rural Development.

And if the first-time buyer's home is larger than 90 square meters, a minimum of 30 percent is required.

The notice, jointly issued by the Ministry of Finance, People's Bank of China and China Banking Regulatory Commission, is the latest state effort to cool down the country's housing market.

Fund management centers across the country will only be allowed to 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. The second home must also be "an ordinary home" - not a luxury property, the notice said.

Moreover, a minimum 50 percent down-payment is required for second-home buyers and interest rates for such mortgages should be at least 10 percent above the standard level.

Loans for third or more homes are banned, the notice said.

Last month, Shanghai Provident Fund Management Center announced a similar policy.

Limited impact

However, the tightened mortgage terms, which came into effect on October 11, are expected to have limited impact on the local housing market, some observers said.

This is mainly due to the low lending ceilings of the program, according to Ma Ji, research manager with Shanghai Centaline Property Consultants Ltd, which operates more than 240 brokerages across the city.

In Shanghai, the lending ceiling for each household under the city's public housing fund program is 600,000 yuan (US$89,820) for first-time home buyers, and 400,000 yuan per household for second-home buyers. But the average property price in Shanghai is more than 20,000 yuan per square meter.

Under the country's public housing fund program, employees pay a portion of their monthly salaries to the local fund management centers and their employers are required to contribute the same amount. Interest rates on the public housing fund loans are lower than those offered by commercial banks.

The new mortgage terms bring the public housing fund in line with earlier policies on similar commercial loans, analysts said.

Commercial banks across the country have tightened mortgage terms over the past six months, since China launched its toughest-ever crackdown against property speculation.

Since October, major banks, including Bank of China, China Merchants Bank, China Construction Bank and Industrial and Commercial Bank of China, have offered a 15 percent discount on standard mortgage rates to first-time home buyers. Previously, first-time buyers could expect discounts of 30 percent.