Shanghai's mutual housing fund authority announced today to raise the ceiling of home loan on the additional mutual housing fund from the existing 30,000 yuan (US$3,628) to 100,000 yuan from next month.

This is the first policy adjustment for the city's mutual housing fund in eight years.

Analysts regard it, along with other minor changes to the mutual housing fund regulations revealed today, an impetus to the housing market by lowering the cost of home loans.

Along with the maximum of 100,000-yuan loan on the compulsory part of mutual housing fund, an employee participating the additional fund program will get a combined 200,000-yuan loan enjoying the favorable interest rates under the mutual housing fund program.

Rates of mutual fund loans are up to one-fourth lower than those of bank rates.

For example, the rate of mutual fund loans under five year periods is 3.78 percent, while that of bank loans is 4.95 percent.  The rates of loans over that period are 4.23 percent and 5.31 percent respectively.

However, not all local people can benefit from the new policy, analysts pointed out, since the additional housing fund is an optional program and not everybody joins it.

(Shanghai Daily January 28, 2005)