The People's Bank of China, the central bank, has yet to provide details of September's mortgage policy announcement, in which it raised the down payment for second-home buyers to try to curb property prices.

The banking regulator convened a meeting last week with the mortgage department heads of several State-owned and joint-stock commercial banks. Interpretation of the new policy by the banks has been inconsistent as they wait for further details.

Financial institutions, especially Chinese banks, are waiting to find out how the central bank defines a second home because the policy could curb demand for mortgages - one of their most profitable businesses.

But the meeting, coinciding with more calls from the central government to rein in soaring property prices, failed to produce a consensus, the Economic Observer newspaper said.

State-owned banks like China Construction Bank and Bank of Communications are treating deals made by buyers' spouses as second-home purchases.

This interpretation is meeting criticism from couples who live in smaller units that they want to sell and replace with bigger ones.

But many other lenders are carrying on as usual.

Insiders argue that no institution would be willing to damage its most profitable business because of an ambiguously worded policy. Analysts have also questioned the efficacy of the policy in curbing speculation. They say property tax or capital gains might be better choices.

(China Daily October 31, 2007)