| Central Bank chief: Mortgage loan rate rise to regulate market |
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| Tuesday,March 22,2005 Posted: 10:16 BJT(0216 GMT) |
BEIJING, March. 21 -- China's recent lift of the mortgage loan interest rate has aroused concerns among consumers that it will now be more difficult to buy a house. But the deputy central bank chief Wu Xiaoling clarified that the change has been made to check rampant speculative activities in the real estate market, and will, in a long run, benefit ordinary consumers. Our reporter Ning Yan has more.
Deputy Governor of the central bank, the People's Bank of China, Wu Xiaoling says the new mortgage loan policies are aimed at gearing down rocketing real estate prices by cooling down speculative activities in the real estate market.
"Through these measures, the central bank intends to readjust the real estate market from the perspective of demand. The target group is not common house buyers, but those involved in excessive speculative activities that have driven up housing prices," said Wu.
Buying a house and renting the property has become a popular way for buyers to payoff their mortgages. But experts have repeatedly warned that investment-oriented house buying may lead to overheating and investment bubbles in the real estate sector.
The price boom is also occurring because overseas investors have been buying up apartments in hopes of profiting from rising prices.
Experts believe that higher interest rates for real estate mortgages can work to decelerate the rising real estate prices. And the markup is estimated to drop from last year's level of 14 percent to 5 percent.
And Wu Xiaoling notes that stable real estate prices will eventually benefit ordinary consumers.
"The fluctuations of housing prices cannot be adjusted merely by financial leverages. They also involve land, fiscal and taxation policies. It needs a wide range of factors in the national economy to help control housing prices on a rational and balanced level," said Wu.
According to the People's Bank of China, the minimum regulated interest rate for housing loans of 5 years or more rose to 5.51 percent, a 0.2 percent increase.
Individuals will be required to make a 30 percent down payment, instead of the original 20 percent.
(Source:CRIENGLISH.com)
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