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Banks can handle 50% housing price drop

By Yu Hongyan (chinadaily.com.cn)
Updated: 2010-05-21 16:36
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Commercial banks can afford up to a 50 percent plunge in housing prices, the Shanghai Securities News reported Friday.

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China's banking watchdog asked commercial banks to apply "stress tests" on property loans at the end of April, as the country has tightened control on its real estate sector.

People close to the China Banking Regulatory Commission said banks are sending back their test results, and the final report on the tests is coming soon.

Commercial banks say they are resilient to possible lending risks brought by housing price drops.

An official from the banking supervisory body said that, as most home buyers are required to pay 50 percent of the housing prices as the down payments, banks' risks would be limited even if home prices fall as much as 50 percent.