Small banks get creative in slump
SHANGHAI: By lowering the mortgage rate and application threshold, some small- and medium-sized banks are vying for a larger market share during the property trading slump. Analysts said such a practice may attract clients in the short term, but it runs counter to government policy.
On Monday, Shenzhen Development Bank (SDB) launched a new line of mortgage loan products in all major cities. By paying 1.5 percent of the total loan as the "fee for point", clients could get a discounted mortgage rate of 3.78 percent annually, or 63 percent of the benchmark lending rate.
However, the central bank requires that the mortgage rate cannot be lower than 70 percent of the benchmark lending rate, or 4.158 percent. Currently, all four major State-owned banks abide by the policy.
