Others News
- 2nd home down payment to be raised
Date: 19-Sep-2007 Sources: (Shenzhen Daily)
THE country will soon raise the down payment requirement for people buying their second home to 40 percent, in an effort to curb speculation in the red-hot property market, banking and regulatory sources said Monday.
It will also raise to 50 percent from 40 percent the down payment requirement for commercial property like offices and retail space, the sources told Reuters.
Currently, all home mortgages require a down payment of 30 percent except for owner-occupied homes smaller than 90 square meters, which enjoy the preferential 20 percent rate.
The sources did not provide a specific date for the changes, but one official said they would be unveiled 'very soon.'
'In order to curb the excessive rises in property prices, the government will on the one hand increase the supply of low-rent flats and on the other hand raise the down payment requirement,'said one source.
China is seeking to combat a surge of liquidity that is entering the country through its large trade surplus, as the central bank, in an effort to keep the yuan steady, buys most of the dollars generated by the surplus.
Economists are concerned that with so much money seeking returns, there is a risk that dangerous bubbles will develop in the property and stock markets, potentially threatening the real economy if and when they should see a correction.
The sources said that while China had limited exposure to the recent financial turmoil surrounding subprime mortgages in the United States, the recent problems had prompted authorities to take pre-emptive measures to prevent such problems in China.
The fresh move would be the second time in about 15 months that the government has raised down payment requirements to try to cool down the property market.
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