Experts urge differential mortgage policy

BEIJING - Experts called for a change in the current mortgage policy in order to facilitate housing demand from individuals as well as curtail speculation, after earlier reports that the central bank decided to relax mortgage lending.

Zeng Gang, researcher at the Institute of Finance and Banking at the Chinese Academy of Social Sciences, said easing lending policies has become a trend as the once-rampant home market has already showed signs of cooling in recent months.

Government data revealed more cities reported month-on-month price drops in August as new homes in 68 saw month-on-month price declines out of 70 major Chinese cities surveyed, compared with 64 in July.

Lian Ping, chief economist with the Bank of Communications, believed policy makers should properly adjust the old restrictive measures as housing stocks pile up and demand cannot be satisfied.

"The current mortgage lending policy was used to rein in the property market a few years ago when prices were rocketing with increasing bubbles," Lian added, suggesting it is lagging behind at present.

China's anti-speculation purchase restrictions, while preventing bubbles, may have "hurt" buyers who truly need a home, Zeng added.

Their remarks came after Chinese media reports said that the central bank asked the four big commercial banks to relax their mortgage rules, which will require a lower down payment on the purchase of a second home amid the sluggish property market.

The original rule stated that any buyer of a second home, with or without mortgage, has to pay a minimum down payment of 60 percent and be charged a mortgage loan rate at 10 percent or more above the benchmark lending rate.

The new rule is said to relax this definition. If the mortgage of a previous home has been fully repaid, the new purchase and new mortgage may be treated as a first mortgage, which requires a lower down payment, 30 percent, and is charged a lower rate, at or with a small discount to the benchmark.

China property hard sell intensifies in bid to lift sagging sector	Chinese cities revamp mortgage rules to boost realty sector