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China urges banks to be flexible with loans for some home buyers

China urges banks to be flexible with loans for some home buyers

FILE PHOTO: An aerial view shows Choi Hung public housing estate and other residential buildings with the Lion Rock peak in the background, in Hong Kong, China June 3, 2021. Picture taken June 3, 2021 with a drone. REUTERS/Joyce Zhou

BEIJING : China's banking watchdog said on Tuesday that banks ought to offer financial support for home buyers with so-called "rigid" demand, referring to purchasing or renting from those recently married or seeking low-cost housing.

Banks should implement differentiated mortgage polices and down-payment requirements, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement, avoiding inflexible rules that penalise non-speculative, legitimate home buyers.

Speculators have stoked Chinese real estate prices in recent years, prompting authorities to roll out restrictions including curbs on borrowing, seeking to control a build-up in financial risks in the property sector.

The curbs have slowed property purchases while some developers have been hit hard by a squeeze in liquidity.

Overall, bank loans in the real estate sector have continued to slow, CBIRC said in the statement.

Sector-wide growth of property loans hit its lowest pace in eight months, while the outstanding size of banks' investment in the sector via special vehicles fell for the 18th straight month, it said.

As of end-July, individual mortgages for first-home purchases accounted for 92per cent of banks' total mortgage loans, while outstanding loans used to rent homes rose 29per cent from a year earlier, the CBIRC said.

(Reporting by Cheng Leng, Zhang Yan and Ryan Woo)

Source: Reuters

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