The second mortgage rule, a newly issued measure to tighten credit requirements, will be imposed on individuals rather than families at the Bank of Communications, a bank executive told Shanghai Daily today.

If the individual has paid up his loans, then his next loan won't be regarded as a second mortgage, according to Ye Diqi, vice president of the bank.

The Chinese central bank has rolled out further measures to tighten credit requirements and curb speculative property transactions.

On September 27, the People's Bank of China and the China Banking Regulatory Commission jointly issued a ruling that requires mortgage holders who apply for another home loan to put a down payment of at least 40 percent and pay a 10-percent premium on their interest rate.

For people seeking a third or fourth mortgage, the down payment requirement and interest rate should be even higher, with specific figures determined by commercial banks.

Regulators didn't bother to provide a definition of a second mortgage, however, leaving individual banks to create their own.

Most commercial banks define a second mortgage only as one that followed an earlier mortgage at the same bank, previous reports said.

(Shanghai Daily October 16, 2007)