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Stocks face pressure as third-home loans halted
Banks in four major cities have halted all third-home loans on orders of the industry regulator, mainland news agencies reported. Bank and property stocks recovered last Friday but analysts believe they will come under pressure this week. "It's still unclear whether there will be other policies to further suppress the property market," said Linus Yip Sheung-chi of First Shanghai Securities. "But a minor correction will still be seen." It will be difficult for mainland property stocks to advance, said Castor Pang Wai- sun of Cinda International. "But such stocks will only dip 10 percent at most." Banks in Beijing, Shanghai, Shenzhen and Hangzhou were told last week by the China Banking Regulatory Commission to stop third-home lending, China Economic Net reported. Although lenders were given flexibility to assess loans depending on risks, they have halted most such loans, sources said. In Beijing, branches of Bank of China (3988), Agricultural Bank of China (1288) and Industrial and Commercial Bank of China (1398) and some other state-owned banks stopped loans for third homes since May, when the municipal government announced policies to rein in the property market. But some branches of China Merchants Bank (3968) and Chinatrust Commercial Bank said they received instructions only recently. Banks in Shenzhen, including Shenzhen Development Bank and local branches of Bank of Communications (3328), said all third-home lending in the city has stopped. The Shenzhen Banking Regulatory Bureau is said to have ordered a comprehensive review on second-home lending. Branches in Shanghai and Hangzhou have taken similar action. Some banks said they received notices. A credit officer said some loans for third homes may be granted, only on condition of a down payment of at least 55 percent, with interest at more than 1.15 times the benchmark rate. Personal loans in Beijing reportedly total 34.2 billion yuan (HK$39.22 billion), with 95 percent of those being mortgages. Sixty percent of the mortgage loans were for new homes and 35 percent for pre- owned properties. http://www.thestandard.com.hk/news_detail.asp?we_cat=11&art_id=101488&sid=29192921&con_type=1&d_str=20100809&fc=10 |
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