Many commercial banks in the country recently tightened individual housing loans with measures that include suspending second-hand home mortgage loans and stopping home equity loans, according to the Oriental Morning Post.

Banks in Shanghai implemented a policy requiring down payment of 30 percent for clients buying their first home. Clients applying for home mortgage loans for a second home, some banks require down payments of 40 percent.

Shanghai banks will not grant loans to the applicants who already have several home mortgage loans if they can not offer assets other than homes as guarantees.

China Construction Bank's Zhejiang branch has suspended all second-hand home mortgage loans. Individual home equity loans and credit loans were also suspended earlier. Several other banks in Zhejiang Province have frozen individual home equity loans and credit loans, too.

Besides China Construction Bank, China Everbright Bank's Hangzhou branch said they have suspended loans to second-hand homes built over 20 years ago with an area of less than 60 square meters and inferior locations.

China Minsheng Banking Corp Ltd's Hangzhou branch and Bank of Communications' Hangzhou branch suspended individual home equity loans and credit loans.

China Banking Regulatory Commission Beijing Bureau recently urged local banks to grant real estate development loans and individual home loans prudently.

Some banks in Shenzhen also tightened individual home loans recently. The main measures include increasing down payments for clients buying several homes, strict qualifications for applicants and lowering appraisal prices for second-hand homes.

Some banks in Wuhan also stopped the business of home equity loans or implemented stricter checkup on the home equity loans.

On one hand, hot stock market has stimulated investment impulsion and encouraged home equity loans to flow into the stock market, resulting in higher risk loans. On the other hand, tightened loans will restrain speculation on real estate and discourage housing bubbles, said insiders.

(China Daily August 9, 2007)