Dec 14, 2011
Translated by Zhu Na

Recently there were reports that some banks in Tianjin had started to lower mortgage rates for first home buyers. Yesterday, a reporter from the Beijing Morning Post went undercover and contacted branches of ICBC, Bank of China, China Construction Bank, China Merchants Bank and other banks in the capital pretending to be a customer.

The journalist learned that some banks in Beijing have also started to lower the interest rates they offer to first home buyers, with many banks dropping their standard lending rate back to the benchmark interest rate. Earlier this year, potential first homebuyers were being offered rates that were 10 percent above the benchmark rate, there are also rumors that some premium lenders can even get loans 10% below the current benchmark rate.

Although there a signs that interest rates being offered to first home buyers are being lowered, some banks still insisted that, "the decision of whether to offer a loan at the benchmark rate, still depends on the specific situation of customers and the houses that they're looking to purchase."

According to the report, loans for first home buyers and both Minsheng and China Merchants are still being offered at a 10 percent premium, but as an employee at one China Merchants branch told us, "it's much easier to get a loan now than it was two months ago."

Guo Tianyong (郭田勇), a professor from the Central University of Finance and Economics, said that one of the reasons that some banks might be lowering the rates they offer to first home buyers is that the recent decision by the central bank to lower the deposit-reserve ratio by 0.5 percentage points, has unlocked approximately 400 billion yuan in additional funds that the banks can lend out.

Links and Sources
Beijing Morning Post: 多地银行房贷政策松绑 首套房贷利率下调