China's Public Housing Fund raises mortgage loan rates
(Xinhua)
Updated: 2006-04-30 09:17
China's Public Housing Fund (PHF) has raised mortgage rates for individual
house buyers by 0.18 basis points effective from May 8.
The annual interest rate for loans with a maturity of five years or less will
rise 3.96 percent to 4.14 percent, the Ministry of Construction, the supervisor
of PHF, said on its website Saturday.
Mortgage loans with a maturity of more than five years will now carry an
annual interest rate of 4.59 percent up from 4.41 percent.
A day earlier, China's central bank raised the benchmark lending rate for
one-year loans by 0.27 basis points from 5.58 percent to 5.85 percent.
The rate for deposits remains unchanged.
The PHF was established in the 1990s following the reform of the housing
system in China.
The PHF was designed to help medium- and low-income earners to buy houses.
Employees are required to contribute 5 to 12 percent of their salaries to the
fund, with their employers contributing the same amount. PHF mortgage loans
carry lower rates than commercial mortgages.
The lending rate hike by the central bank is aimed at preventing the economy
from overheating, in response to rapid expansion of loans and fixed-asset
investment in the first quarter.
Central bank officials said they hope the hike will help stop housing prices
in major Chinese cities from soaring further.
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