Banks scrap discounts for first-time homebuyers

Some commercial banks have abolished a 15 percent discount on mortgage interest rates for first-time homebuyers, the China Securities Journal reported on Sept 12.

The banks include Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China.

Banks apply different mortgage interest rates to first-time homebuyers in several cities.

In some cities, the rates are set with a 10 percent discount on the benchmark interest rate; while in other cities, the rates are 5 to 10 percent higher than the benchmark interest rate.

"About 80 percent of the commercial banks have canceled the 15 percent interest rate discount for first-home purchases. Only a few foreign-funded banks offer the discount," an employee of Syswin Inc, a real estate service provider, was quoted by the newspaper as saying.

"Most of Beijing's commercial banks seem to have reached a consensus weeks ago by canceling the 15 percent mortgage rate discount," the employee added.

In cities such as Shanghai, Shenzhen, Taiyuan in Shanxi province, and Sanya in Hainan province, banks are also said to not offer the discount.

Analysts said that getting property loans will become more difficulty and that banks are expected to tighten credit in the second half of the year.

"If more banks cancel the discount on mortgage loans for first-time homebuyers, property developers will take measures such as slashing the prices to attract homebuyers," said Zhang Hongwei, director of Shanghai-based property consulting firm Tospur.