China Banks Offer Discounts To First-Home Buyers


The Shanghai, Beijing, and Guangzhou branches of some commercial banks, including Bank of China (601988, 3988.HK) and China Construction Bank (601939, 0939.HK), extended 15 percent discounts off the benchmark mortgage loan rates for first-home buyers, reports China Securities Journal.

According to the report, not all the commercial banks offered such discounts.

A source at a commercial bank in Shanghai said his bank was still levying the benchmark rates as it has not received any  notification.

Major banks had tightened requirements for home buyers in 2011, increasing down payment requirements for first-home buyers to 30 percent, and terminating discounts.

Qing Hong, head of policy research at the Ministry of Housing and Urban Rural Development, said the tightened policies added to the burdens of first-home buyers.

Liu Shiyu, deputy governor of The Peoples’ Bank of China (PBOC), said in a recent interview banks need to extend loans to first-home buyers, and encouraged banks to offer discounts on such mortgage loans.

According to Li Wenjiang, chief analyst at property agency Hopefluent Group Holdings (0733.HK), the mortgage discounts may lead to home purchases by buyers with inelastic demand, helping to push up home transaction volume.

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