Growth in individual mortgage lending in Shanghai dropped sharply in August due to a stagnant property market, the central bank said yesterday.

New individual mortgages at banks rose 290 million yuan (US$42.4 million) in August, down 2.51 billion yuan from a month ago, said the Shanghai headquarters of the People's Bank of China yesterday.

The slowdown is mainly due to declining real estate transactions in the city, the central bank said yesterday.

Individual mortgages for newly built properties fell 620 million yuan while loans for second-hand homes grew 910 million yuan.

The domestic banks also switched their yuan lending focus from the service industry in July to the industrial sector in August, the central bank said in a report.

About two-thirds of the new yuan-loans from the domestic banks on China's mainland went to the manufacturing, electricity, gas and water supply industries, while foreign banks in Shanghai lent mainly to manufacturing, property and rental sectors.

Total yuan lending rose 18.16 billion yuan in August, up 5.4 billion yuan from a month ago, or a year-on-year jump of 4.06 billion yuan.

With the weak property sector, a wait-and-see attitude among buyers, and sluggish stocks, more household savings have been put in bank accounts which saw 27.78 billion yuan last month, up 26.36 billion yuan from a year ago.

(Shanghai Daily September 11, 2008)