Economic Trend News
- BoCom Beijing branch defines '2nd-home'
Date: 5-Nov-2007 Sources: (Shenzhen Daily)
THE Bank of Communications (BoCom)' s Beijing branch has recently defined a 'second-home?mortgage, which is based on the property owned by the applicant instead of the applicant' s family.
'In Beijing, we will examine whether the loan applicants, either individual borrowers or co-borrowers, are trying to buy a second apartment,'said Zhang Xin, an official in charge of credit management at BoCom' s Beijing branch.
'If any of the co-borrowers already has a house mortgage that hasn' t been paid off, his new loan application will be considered as a ' second-home' mortgage. It means he will have to face a higher down payment and interest rate,'Zhang said.
But he stressed that his bank would not check whether the applicant' s spouse already had an apartment unless the spouse was registered in the lending account as a co-borrower.
The definition of a second-home mortgage has been a topic of controversy after the central bank decided to raise mortgage deposits for homebuyers who intend to buy a second apartment, a move aiming to curb property speculation.
In late September, People' s Bank of China, the central bank, and the China Banking Regulatory Commission jointly issued a new rule that required mortgage holders applying for another home loan to place a down payment of at least 40 percent and pay a 10-percent premium on their interest rate.
For people seeking a third or fourth mortgage, the down-payment requirement and interest rate are even higher, with specific figures determined by commercial banks.
However, the regulators did not define a 'second-home?mortgage, such as whether it regarded a borrower and his family members as a whole unit or whether a borrower' s family members were immune from the new rule.
The authorities left the right of definition up to banks themselves, since they had their own unique situations related to loans and local real estate markets, analysts said.
Lenders like China Construction Bank and Bank of China have taken a tougher line. They define a 'second-home?mortgage based on the family unit, which means if, say, the husband has already applied for a mortgage and the wife applies for a new loan on another property, the couple will have to offer a 40 percent down payment according to the new rule.
However, BoCom decided to allow its local branches to make their own definitions.
Sponsor Results:
