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Friday, September 9, 2011

Shanghai banks tighten mortgage lending paper

BEIJING, Sept 9 (Reuters) Chinese banks in Shanghai have either stopped mortgage lending or are making it harder to get loans, the official China Securities Journal reported on Friday.

The central bank's recent move to widen the base of total deposits that banks must set aside for reserves further crimped banks' ability to lend, while record high home prices are also making them nervous, the newspaper said, citing unnamed banking sources.

Banks in Shanghai that the newspaper visited have taken various steps including halting mortgage lending, extending loan approval times because of tight quotas, excluding applicants whose homes are old or expensive or raising mortgage rates beyond regulatory requirements, the paper said.

China has rolled out a slew of measures since late 2009 to curb property speculation and rein in runaway housing inflation.

So far, they have yielded some results and there are growing signs that home prices are starting to fall in some cities where they have gained rapidly in the past few years.

The top banking regulator has constantly warned against lending to the real estate sector, but has also repeatedly reaffirmed that Chinese banks could withstand home price falls of up to 50 percent.

By The Star

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