Business | Shanghai banks told to limit loans to property developers
An excavator at work on a construction site of new residential buildings in Shangha. Reuters
An excavator at work on a construction site of new residential buildings in Shangha. Reuters

Shanghai banks told to limit loans to property developers

Latest cooling measures also target borrowers suspected of trying to access mortgages by getting divorced

October 14, 2016 11:21 AM (UTC+8)

Banks in China’s financial hub Shanghai have been asked by authorities to limit loans to property developers for land purchases and to scrutinize would-be borrowers suspected of trying to access mortgages by getting divorced, the Shanghai Daily reported on Friday.

The steps were the latest in a string of measures around the country to try to cool a property market seen at risk of overheating.

Quoting unidentified commercial bankers, the newspaper said banks were told that housing developers should pay at least 30 percent down on residential projects instead of relying on bank loans.

It said some developers had put only 10 percent down on projects and raised the remaining funds through bank and grey-market loans.

Banks were also asked to reject mortgage applications of people who had divorced within three months, it quoted an internal filing from a Shanghai-based rural commercial bank as saying.

A property price rally has prompted a home buying frenzy in parts of China, in some cases prompting couples to get divorced to circumvent buying restrictions and invest in multiple homes.

Police last month detained seven property agents in Shanghai for spreading rumors of plans for a new government regulation that caused a rash of divorces and a rush to buy new homes.

On Wednesday, the Shanghai branch of the China Banking Regulatory Commission, the country’s banking regulator, held a meeting about rising housing prices with major lenders, the newspaper reported.

 

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