Abstract:
In this paper we will discuss about the trends of the mortgage rates in China. The mortgage rates have increased of late. Moreover, the Central Bank has also made some other changes in the mortgage interest rates.
The Central Bank of China has increased the mortgage rates recently. The government aims to pay off the mortgage ahead of time so that it can avoid the high interest rates.
Many people in China have sold the treasury bonds. The interest rates are increasing successively.
The public housing fund also has increased the mortgage rates by 18 basis points for the individual home buyers.
According to a government official, the yearly rate of interest for loans with maturity of 5 years or less may go upto 4.14% from the current rate, 3.96%.
The supervisor of the Public Housing Fund also has confirmed that statement.
- Mortgage loans, the officials have said, with a maturity of over 5 years will be charged with an yearly 4.59% interest rate. The previous rate was 4.41%.
- Earlier, in the beginning of 2006, the Central Bank of China made the benchmark lending rate up from 5.58% to 5.85% for the 1 year loans, that is it was increased by 0.27 basis points. The Bank has said that this hike in the benchmark lending rate will hardly have any impact on the housing mortgages.
- The government now wants to protect the mortgage sector from overheating due to an increasing trend of mortgage loans and fixed-asset investments in 2007.
- In fact, the public housing fund has been now designed in 1990 at the time of housing reform in China, in a new format to empower the people of low income so that they can buy homes.
- The employees have to give 5% to 12 % of their earnings to the fund. The interest rate of the fund's mortgage loans are lower than the commercial mortgages.