Financial China

Mortgage rate rises to spread

  • Published 06 May 2010

While the media debates incessantly when Beijing will raise rates, the Bank of China has gone ahead and done just that on mortgage lending, and we expect other big banks to follow suit – with implications for both bank profit margins and the property market.

Mechanisms of the BoC mortgage rate hikeLittle noticed amid the flurry of administrative measures aimed at cooling China's real estate market was the Bank of China's (BoC) announcement on April 23 that it would raise its mortgage lending rates. We think this decision – which we expect will soon be followed by several other large banks – will turn out to be one of great significance for the banking sector and the property market.

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