Economy

China to ban Public Housing Fund mortgage for third home

(Xinhua)
Updated: 2010-11-04 08:59

BEIJING - China's Ministry of Housing and Urban-Rural Development announced Wednesday it will block the Public Housing Fund (PHF) mortgage for third home buyers, a move to further curb property speculation.

The announcement was made in a circular jointly issued by the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, People's Bank of China, and the China Banking Regulatory Commission.

The ministry has also placed a restriction on second home buyers.

Second home buyers with a per capita living area higher than the local average level cannot apply for the PHF mortgage, according to the circular.

Minimum down payments for second homes buyers are no less than 50 percent of the total price, and the PHF mortgage interest rate will be slightly more for second home buyers than first home buyers, the circular said.

Cautious monetary policy urged Related readings: China suspends loans to third home buyers Third-home loans stopped in Shanghai Housing a basic right, says NPC China raises Public Housing Fund mortgage rates

The ministry did not specify when the regulations would come into effect.

The move followed the PHF mortgage rate hikes of 0.17 to 0.18 percentage points announced on Oct 20.

Established in the 1990s, the PHF scheme was designed to help medium- and low-income workers to buy homes. Employees are required to contribute 5 to 12 percent of their salaries to the fund, with their employers contributing the same amount.

PHF mortgage loans carry lower rates than commercial mortgages. Bank loans with a maturity of five years or more, for example, now carry a rate of 6.14 percent in China.

China's real estate market has continued to expand despite the government's anti-speculation efforts.

Property prices in 70 major Chinese cities rose 9.1 percent year-on-year in September, data from the National Bureau of Statistics (NBS) showed.