'Big four' to adopt same criteria defining 'second home'

By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-10-18 13:41

The People's Bank of China, the country's central bank, will establish unified criteria defining the "second home" for China's four biggest Stated-owned commercial banks, Caijing.com.cn today cited a bank official as saying.

Zhang Qi, vice president of the Industrial and Commercial Bank of China (ICBC)'s Shanghai branch, said the central bank is discussing the definition of a "second home" in association with the big four lenders.

Following ICBC, the next three biggest commercial banks are the Bank of China, China Construction Bank, and Agricultural Bank of China.

Zhang said that ICBC is to formulate detailed implementation measures after the unified criteria are launched.

One question is whether a "second home" is to be judged by household or individual.

Central bank vice governor Su Ning said earlier this month that the bank's credit collection system can handle credit receivers' first and second apartments, and more homes as well.

Zhang added that the central bank's criteria will be compulsorily carried out by the four biggest commercial banks.

The Shenzhen Daily reported that Chinese banking authorities have fixed three basic criteria defining the "second home" as a guideline for commercial banks when raising down payments for second-home buyers.

The "Three Basic Lines" are first, a loan from personal provident funds will not be taken into account when judging a second-home mortgage. Second, a borrower who has paid off all his previous home loans will be considered a first-home buyer. Third, a transaction by a home loan borrower's spouse will be defined as a second-home purchase.

In a bid to curb speculations and ease risks, the central bank, along with the China Banking Regulatory Commission, last month raised the minimum mortgage down payment for second-home buyers to 40 percent from 30 percent. Meanwhile, the mortgage rate for second homes has been set at 1.1 times the benchmark one-year lending rate.

Property prices in 70 major cities jumped 8.2 percent in August from a year earlier after gaining 7.5 percent in July, according to figures from the National Development and Reform Commission.


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