February 26, 2013 / 11:46 AM / in 5 years

China's Ping An Bank says bars branches from issuing mortgages

BEIJING, Feb 26 (Reuters) - China’s Ping An Bank has banned its branches from approving home loans in a move by banks turning cautious on the country’s frothy property market, where prices are again zooming towards record highs.

A recent rebound in China’s home prices has fanned investor speculation and risk that the government may toughen a three-year campaign to cool property price inflation by introducing new measures.

“Our head office has asked branches to hand over the right to examine and approve mortgage loans recently and all mortgage cases will be handled by the headquarters,” Ping An said in an email reply to Reuters.

“The head office will prioritise loans for home occupiers while restricting speculative purchases of homes,” Ping An said.

In a bid to calm the real estate market, China’s cabinet last week restated its intentions to expand a pilot property tax programme to more cities and urged local authorities again to control prices of new homes.

To raise China’s record-low home affordability and keep a lid on social discontent, Beijing has instructed banks to prioritise and assist first-home buyers.

As such, some banks, including Ping An, give first-home buyers a 15 percent discount on benchmark interest rates for mortgages. Second-home buyers, on the other hand, are charged mortgage rates 1.1 times that of benchmark levels, Ping An said.

Reporting by Xie Heng, Shao Xiaoyi and Koh Gui Qing; Editing by Robert Birsel

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