Commercial lenders in Shanghai are taking strong steps to penalize late housing loan payments by adding up to 50 percent to the interest rates for overdue payments.
¡¡¡¡
¡¡¡¡Analysts said yesterday that the measure, primarily a precautionary effort by banks, is designed as a warning to property investors. It comes as the country is taking stringent measures to rein in skyrocketing housing prices.
¡¡¡¡
¡¡¡¡The move, taken by the local branches of Bank of China (BOC), China Minsheng Banking Corp, Industrial and Commercial Bank of China and some other lenders, comes after lenders reported a higher percentage of bad housing loans from earlier this year.
¡¡¡¡
¡¡¡¡Unlike its branches elsewhere in China, Bank of China¡®s Shanghai branch has increased charges by 50 percent calculated according to the current interest rate for delayed housing loan payments.
¡¡¡¡
¡¡¡¡It means a home buyer who bought an apartment on instalments of five years or longer with a monthly payment of 3,000 yuan (US$375) has to pay a 0.8 yuan (10 US cents) penalty charge for each day they delay, up roughly 0.3 yuan (3.8 US cents).
¡¡¡¡
¡¡¡¡Other lenders in Shanghai have imposed a similar extra charge on late housing loan payments, with the China Minsheng Banking Corp, the country¡®s first private lender, adding an additional 40 percent in its Shanghai branch.
¡¡¡¡
¡¡¡¡The Industrial and Commercial Bank of China, the country¡®s largest lender, imposed a 30 percent extra charge in Beijing and Shanghai from the beginning of this year.
¡¡¡¡
¡¡¡¡"It¡®s not discouraging news and will not influence customers as long as they pay back the loans on time," an official of BOC¡®s Shanghai branch said yesterday.
¡¡¡¡
¡¡¡¡It is widely seen as a sign that banks in the city have switched their focus to housing loans management rather than concentrating on offering loans to new home buyers.
¡¡¡¡
¡¡¡¡"From 2001, the Shanghai real estate market began to enjoy a boom," said Li Hong, dean of the banking studies department under the Shanghai University of Finance and Economics, yesterday.
¡¡¡¡
¡¡¡¡"At that time, banks were in a frenzy to expand retail business, mainly for auto and housing loans, as corporate business made slow progress."
¡¡¡¡
¡¡¡¡It is estimated that up to 90 percent of a bank¡®s retail business is property related.