November 10, 2016 / 5:01 AM / 3 years ago

China banks given hard cap for November home loans-report

BEIJING, Nov 10 (Reuters) - Regulators in China have told banks new home mortgage loans in November must be below those issued in October, Shanghai Securities Journal reported citing industry sources, as Beijing looks to curb rising leverage in the housing sector.

Mortgages accounted for 35 percent of loans in the first half of 2016, but analysts estimate that jumped to 71 percent in July and August as frantic buying kick in thanks to rapidly rising prices.

China’s banking regulator previously asked lenders to step up risk management of property loans amid record gains in house prices that have raised concerns of price bubbles and ballooning debts.

China’s new home prices rose in September at the fastest rate on record, according to data published by the National Bureau of Statistics on Oct. 21.

Outstanding mortgage loans to individuals rose 33.4 percent to 17.93 trillion yuan ($2.65 trillion) from a year ago by the end of September, China’s central bank said on the same day.

Banks need to focus on controlling credit risks and replenish capital reserves in the face of potential challenges from an aging population, a contraction in credit and falling home prices, the Shanghai Securities Journal cited a source close to the regulator.

Second-tier city Hangzhou on Thursday implemented new rules for home buyers, including higher down payments for second homes and restrictions on non-residents from buying properties, the city government said on its official microblog late Wednesday.

Dozens of cities have implemented measures restricting home purchases over the last few months as price gains spread to more cities.

Hangzhou new home prices rose 28 percent year-on-year in September, according to official data.

Reporting by Elias Glenn; Editing by Shri Navaratnam

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