Many lenders in China have withdrawn their informal 15 percent discount on mortgage interest rates for first-time home buyers, an indication that banks are beginning to cooperate with government efforts to curb rising housing prices, according to local media reports.
The Agricultural Bank of China, China Construction Bank and the Industrial & Commercial Bank of China are just a few big names that scrapped the discount which was widely offered across the country, contrary to the central government’s efforts to clamp down on sky-high prices.
An unnamed source said that lenders were offering the 15 percent discount to first-timers after reaching a “tacit understanding” about it. Meanwhile, some foreign banks are still offering such discounts.
Despite the government’s efforts to cool the property market over the last two years, home sales in China still rose this summer thanks to city-by-city policy tweaks and national interest rate cuts.
Earlier reports also revealed that the 15 percent discount was meant to boost borrowing as borrowers could save around 150,000 yuan (S$29,100) in interest off a 1 million yuan (S$194,000) loan that’s payable over 20 years.
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