Chinese Banks Begin To Raise Mortgage Rates

Raising rates on reverse repos, hiking the cost it charges on its Medium-Term Loan Facility and Standing Lending Facility, five consecutive day without a reverse repo liquidity injection (or rather a CNY715 billion liquidity drain), and now in the latest indication of overall tightening of monetary conditions, China has started to hike mortgage rates.
According to press reports, some bank branches in Beijing, Guangzhou and Chongqing have raised mortgage rates for first-home buyers recently. The China Securities Journal confirms as much, reporting that China’s banks in some big cities have started to lower discounts on lending rates for fist-time home buyers, joining recent steps to curb financial risks stemming loose credit conditions.
Following up on the Chinese report, Reuters notes that since the start of 2017, banks in Beijing have started discounting mortgage rates as much as 10 percent off the official benchmark rate, reducing from as much as 15 percent previously, CSJ said on its website. The current one-year benchmark lending rate set by the People’s Bank of China is at 4.35 percent, the lending rate for loans up to five years is at 4.75 percent and loans longer than 5 years is at 4.9 percent.
Few lenders in Beijing and Shanghai still offer mortgage rate discounts more than 10 percent off the benchmark, the Chinese paper said. “There are indications that the financial environment for the property market will no longer be loose in 2017,” it said.

This post was published at Zero Hedge on Feb 9, 2017.