February 23, 2018 / 9:18 AM / a year ago

Banks in China's Hebei province hike home mortgage rates

BEIJING, Feb 23 (Reuters) - Banks in the northern Chinese province of Hebei have raised mortgage interest rates for first- and second-home buyers, the local banking regulator said on Friday.

The mortgage interest rate for first-home buyers has been increased by 5-10 percent over the central bank’s long-term benchmark rate, the spokesman for the provincial banking regulator told Reuters.

The central bank’s benchmark lending rate for loans longer than 5 years, currently at 4.9 percent, is typically used to set floating-rate mortgages.

Meanwhile, the interest rate for second-home buyers in the province has been hiked by 20 percent over the benchmark rate, the local official said.

Housing prices in Hebei surged nearly 23 percent last year to an average 10,133 yuan ($1,600.44) per square metre, even as authorities unveiled a flurry of cooling measures to contain fast rising prices.

The average mortgage interest rate for first-home buyers in 35 major cities monitored by Rong360, a Chinese provider of loan services, rose by 11 percent over the benchmark rate to an average of 5.43 percent at the end of January.

China’s housing prices have soared over the past two years, prompting more than 100 cities to impose measures to curtail speculative buying, with Chinese President Xi Jinping reiterating that “houses are built to be lived in, not for speculation”.

But the property market has started to show signs of fatigue in recent months as the cooling measures and higher borrowing costs start to weigh on real estate investment.

Average nationwide home prices are expected to edge up just 2 percent in the first six months of this year before flatlining in the second half of 2018, according to economists in a recent Reuters poll.

$1 = 6.3314 Chinese yuan renminbi Reporting by Yawen Chen, Stella Qiu and Elias Glenn; Editing by Kim Coghill

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