Wendy Zhang/ Shanghai Daily news

Chinese banks are considering assessing penalties if housing mortgage holders repay their loan ahead of schedule, eastday.com reported today.
On October 29 last year, the Chinese central bank's first increases of interest rates in nine years encouraged crowds of borrowers to repay their home loans in advance. On March 17 of this year, the central bank's second increase in housing lending rates has made more mortgage holders follow suit.
As the new rate will be effective on January 1 next year, the number of those repaying loans is expected to reach a peak by the end of this year.
Borrowers who want to repay their loans in advance are now being required to make an appointment with the bank. As the country's four largest state-owned banks have the largest share of the domestic property loan market, borrowers have to wait in queues to return their loans ahead of schedule. Some residents who submitted aplications last year have to wait until May or June of this year.
A growing number of loans returned in advance is disturbing the mid and long-range plans of banks, and is also causing them interest rate losses, said an industry analyst.
In order to put a lid on the growing number of borrowers returning their loans, many banks are considering collecting penalties for breaching the contract.
The Bank of China has started to collect a penalty equivalent to its one-month lending rate. Borrowers are not allowed to repay loans early within the first year.
The other three state-owned banks, the Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China, are also contemplating penalties.
China's stock holding banks, including the Pudong Development Bank, China Minsheng Banking Corporation and China Everbright Bank, clarified that they have no plans to collect such penalties at the present time. "If we do so, we will lose clients," said a spokesman with the China Minsheng Banking Corporation's Guangzhou branch.