Shanghai's public housing fund center quietly rolled out more
preferential policies for home buyers seeking mortgage loans in
order not to kindle direct competition with commercial banks.
Buyers of three new developments and all second-hand homes in
Pudong New Area were the first batch of beneficiaries from the new
policy. It allows them to apply for an additional loan of 1,000
yuan (US$125) per square meter to decorate.
Take a 100-square-meter large apartment for example, after a
maximum loan of 300,000 yuan offered by the current program, buyers
can apply for an additional 100,000 yuan to decorate.
However, home buyers did not know about the additional loan
until three developers advertised apartments at a housing
exhibition held during the May holiday.
Feng Yun, an official with the public housing fund center, said
the new policy is a trial limited to Pudong at this stage. He
declined to reveal more details such as whether it will be applied
to other developments across the city.
"Though we have received a lot of applications from developers,
we want to get feedback from customers first," Feng said.
The new policy was not given any official publicity. Real estate
agencies are expected to tell buyers about it when they apply for
mortgage loans from the center, according to Feng.
The housing fund center said in March that it plans to
significantly raise the maximum loan limit for home buyers.
But afterwards it was quietly urged by local commercial lenders
not to do that, industry insiders said.
Both parties have seen a significant drop in mortgages since
last June as housing sales slowed. Both banks and the housing fund
center want to revive the once-lucrative business.
Typical home buyers in Shanghai borrow money from both the
public housing fund and commercial banks to finance purchases.
They prefer borrowing money from the public housing fund as
loans from this source are charged about 1 percentage point lower
than those from banks.
The gap widened after the central bank raised the benchmark
lending rates last month, pushing housing fund center loans 0.18
percentage points higher, compared to the 0.27 point increase of
commercial bank loans.
The city's housing fund program requires employees to pay a
portion of their salaries to the fund on a monthly basis.
(Shanghai Daily May 10, 2006)