The China Securities Journal has revealed that banks in Shanghai have either ceased mortgage lending or are imposing stringent requirements on granting loans.
According to its report, the central bank’s initiative to widen the base of total deposits allocated for reserves further restricted the ability of the banks to issue loans, while skyrocketing home prices are making them anxious.
It noted that banks are halting mortgage lending and extending loan approvals due to tight quotas, as well as rejecting applicants whose homes are old or expensive and raising mortgage rates above the regulatory requirements.
The central government has introduced a series of measures since 2009 to cool down property speculation and curb runaway housing inflation.
The initiatives have had marginal results, such as declining home prices in some cities, where sharp increases have been recorded in the previous years.
Although the central bank has continually warned against lending to the real estate sector, it has also reaffirmed that banks can withstand home prices falling by up to 50 percent.
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