Shanghai sees slower growth in home loans for 8th straight month

Growth of home loans in Shanghai slowed in July for the eighth consecutive month amid a cooler real estate market  in the city,  the Shanghai headquarters of the People's Bank of China said a statement today.

Banks in Shanghai extended 10.68 billion yuan (US$1.6 billion) of mortgages in July, down 14.84 billion yuan from the same month last year, the statement said.

The slower rise in home loans was due to the city government imposing higher downpayment and mortgage rates, as well as tightening home purchase restrictions last November to rein in rapid increases of home prices.

Sales of residential projects in the January-July period tumbled 36.5 percent year on year to 7.32 million square meters, data with Shanghai Statistics Bureau showed.

In July, home loans accounted for nearly 60 percent of the total new yuan lending in Shanghai, above the 37.2 percent proportion recorded for the first half of the year.

Banks, especially smaller ones, have also reduced their home mortgage business amid the tight liquidity due to financial regulators stepping up inspections to prevent risks and control a debt build-up.

Minsheng Bank and CITIC Bank in May halted home loans in Shanghai by setting their rates at 1.2 times of the benchmark lending rate for first home buyers, whereas large banks continued to offer preferential rates at 5 percent off the benchmark rate.