Inside the Great Wall:Banks in different cities are adjusting up the mortgage interest

Banks in different cities are adjusting up the mortgage interest

    1) Beijing: apart from first home mortgage interest being adjusted to 1.1xPBOC rate, second home mortgage interest is also adjusted to 1.2x PBOC rate.

    2) Guangzhou: banks in the city are adjusting up the mortgage interest to 1.05-1.2x PBOC rate. 3) Fuzhou: a commercial bank in Fuzhou is adjusting up thefirst/second home mortgage interest to 1.1x/1.2x PBOC rate. Moreover, anindustry participant commented that, the bank’s quota is tight and lendersneeded to wait for approval. However, the banks have not stopped grantingmortgage yet. (CFI)Deutsche Bank comment: It is expected that the sales volume will likely bedropped due to the tightening measures and banks’ liquidity tightening on theincrease in effective interest rate on mortgage, as well as the slow approval time.

    We continue to expect a 5% sales volume decline in 2017 and a 5% price dropin T1/2 cities.