People's Bank of China and China Banking Regulatory Commission, Circular on Issues Relevant to Improving the Differential Loan Policies on Residential Premises

Issued: September 29 2010

Main contents: All commercial banks shall cease to grant mortgage loans to resident families that purchase the third or more unit(s) of residential premises, or to non-local residents who are unable to provide at least one year's proof of local tax payment or social insurance contribution (Article 1). The percentage of down payment for mortgages to purchase commodity residential premises shall be raised to 30% or above. For families that purchase a second unit of residential premises with a mortgage loan, the percentage of the down payment shall be stringently kept at a minimum of 50%, and the interest rate for loans may not be lower than 1.1 times the benchmark interest rate (Article 2).

All commercial banks shall strengthen their management of loans for consumption. Such loans may not be used for purchase of residential premises (Article 3). In the case of real property developers that have records of violation of laws and regulations such as leaving the land idle, changing the use and nature of the land, delaying the construction commencement or completion date, or hoarding property, all commercial banks shall cease to grant loans for their new development projects or to extend their loan terms (Article 4).