Housing fund loans may be hard to get
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Authorities in Shanghai have temporarily stopped the city's public housing fund from making some loans to home buyers, in an effort to cool the city's housing market.
The Shanghai Provident Fund Management Center said the fund will no longer extend loans to second-home buyers if the floor area of their first home divided by the number of family members is larger than the local average of 34 square meters per family member.
Moreover, loans to second-home buyers are capped at 400,000 yuan (US$59,940), if the floor area of their first home per family member is no more than 34 square meters, the center said.
The fund also stopped lending for purchases of third and more homes, in line with national policy.
For a family's first-home purchase, the loan is capped at 600,000 yuan, and the down-payment ratio is at least 20 percent if the home is no larger than 90 square meters. The minimum ratio is 30 percent if the home is larger than 90 square meters.
"Basically, the tightened mortgage policies implemented by Shanghai Provident Fund Management Center which became effective this week are complementary ones to the new set of rein-in measures launched by the city government on October 7," said Ma Ji, research manager with Shanghai Centaline Property Consultants Ltd, operator of the city's largest estate chain. "Their impact on the housing market should be limited mainly due to the rather low lending ceilings under the program."
At the moment, the lending ceiling for each household under the city's public housing fund program is 600,000 yuan while a maximum loan of 800,000 yuan is allowed if two people responsible for the repayment both have extra funding accounts.
In China, residents contribute half to the public housing fund and their employers contribute the other half. Interest rates on the fund loans are lower than bank loans.
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