China slows lending to domestic property sector
(5 May 2010 – China) The Chinese Government has instructed banks to lift their capital reserves as a key measure in slowing down lending given concerns around a possible property bubble forming in the economy.
The increase is expected to be 50 basis points as from the 10th of May but excludes rural credit cooperatives and banks.
The target for new lending set by the authorities is 7.5 trillion yuan (US$1.1 trillion), which has been supported by other measures including restrictions on advance sales of new property developments, an increase in interest rates on three month and one year benchmark treasury bills, curbs around loans for third home purchasing, increased minimum deposits on second home buying and quarterly stress testing required by regulators on bank mortgage books as a way of limiting bad loans.
The target for new lending set by the authorities is 7.5 trillion yuan (US$1.1 trillion), which has been supported by other measures including restrictions on advance sales of new property developments, an increase in interest rates on three month and one year benchmark treasury bills, curbs around loans for third home purchasing, increased minimum deposits on second home buying and quarterly stress testing required by regulators on bank mortgage books as a way of limiting bad loans.
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