China raises mortgage rates in line with interest rates

BEIJING (Reuters) - China raised mortgage rates by 25 basis points on Sunday, the Ministry of Housing and Urban-Rural Development said, the second increase this year, after benchmark interest rates increased on Saturday.

After Sunday’s move, the rate for mortgage loans longer than 5 years will be 4.30 percent, and 3.75 percent for those of five years and shorter.

China’s central bank raised interest rates by 25 basis points on Saturday, the second time in just over two months, in a bid to contain the country’s stubbornly high inflation.

“This will further increase the cost of home purchases and will, to some extent, curb investment demand in the property market,” the official Xinhua news agency cited Chen Ming, marketing chief of real estate 5i5j, as saying.

Beijing started tightening the property market late last year, but house prices have remained out of reach for most middle-class families in many cities, although house price has slowed recently.

Land cost, a major contributor to high housing prices, have showed signs of rebound in recent weeks, triggering concerns of fresh tightening steps by the central government.

Reporting by Langi Chiang and Chen Aizhu