BEIJING, Feb 28 (Reuters) - Chinese banks have raised mortgage rates for first-time home buyers due to tighter liquidity, a private survey showed on Friday, adding pressure on a property market that has shown initial signs of cooling down.
Nearly 90 percent of 69 bank branches in 22 Chinese cities have stopped offering preferential mortgage rates to first-home buyers, with some increasing the rates 5 to 10 percent above the benchmark rate, according to a survey by CRIC, a unit of real estate services firm E-House China.
Less than 3 percent of the respondents still offer preferential mortgage rates, the survey showed.
That compared with 21 percent of bank branches offering discount mortgage rates to first-time home buyers in the previous survey conducted in December 2013.
“The increasing home mortgage rates will likely weaken the purchasing power of first-home buyers and curb home buying demand,” said Yang Kewei, a property analyst at CRIC in Shanghai, adding that liquidity conditions have tightened this year as banks turn to more profitable loans.
China’s housing market began to show signs of losing momentum at the end of 2013 as local governments took further tightening measures at the prompting of a central government worried about the risk of an asset bubble.
To curb speculative home buying, Chinese banks are allowed to offer as much as a 15 percent discount on loans to first-time home buyers while second-home buyers have to pay 10 percent above the benchmark rates.
The tighter mortgage moves add to recent indications of a cooling down in the property market, raising concerns over the health of an important driver of the economy.
Some Chinese property developers have been stepping up the use of sales promotions for some suburban housing projects.
Meanwhile, Industrial Bank said on Monday that it had halted mezzanine financing for the real estate sector as it was reviewing its property lending business ahead of a new set of internal management rules to be introduced in March.
But the official Xinhua news agency said this week that China’s major lenders have not tightened or halted their property-related lending business. (Reporting By Xiaoyi Shao and Kevin Yao; Editing by Chris Gallagher)