Many local banks have denied media reports that they will lower credit thresholds for home buyers by the end of this year, the Oriental Morning Post reported today.
For the previous three quarters, domestic commercial banks have reported new loans of only 1.79 trillion yuan (US$220 billion), far less than the 2.6 trillion yuan in the central bank's target this year. The media is therefore speculating that the remaining amount, over 800 billion yuan, would be offered in the last quarter of the year.
However, local banks have denied the speculation.
"Internal factors prevent us from offering loans at will, as banks usually have plans and procedures for giving out loans, so it is definitely impossible for banks to relax credit policy just to fulfill their target," said a spokesman with the Industrial and Commercial Bank of China (ICBC)'s Shanghai branch, adding that most banks will offer fewer loans at the year end.
"Our housing loans are increasing steadily every year, with a balance of 19.5 billion yuan in 2001, 28.5 billion yuan in 2002 and 35.5 billion yuan in 2003," the spokesman pointed out. The figure reached 40 billion yuan by August this year.
Many commercial banks are focusing on collecting loans at the end of the year, so loans will usually decline by that time, said an industry analyst with another local bank.
People buying used homes have to pay at least 30 percent of property prices as initial payments, the analyst said, dispelling the rumor that the proportion would decline to 20 percent.