China has lowered the capital threshold for developers of affordable housing to boost financing for cheap homes, banking regulators said yesterday.
Developers of affordable housing in China will need to provide at least 30 percent of a project's funding themselves when applying for loans, lower than the 35-percent capital requirement for commercial projects, the People's Bank of China and the China Banking Regulatory Commission said yesterday in a new rule.
The maturity of the loans ranges from three years to five years, up from a previous ceiling of three years.
Banks are allowed to offer up to 10 percent discount on interest rates for these projects from the benchmark rates. Before the new rule, banks could not offer discounts on interest.
The benchmark lending rate for loans of less than five years is now 7.47 percent.
Regulators also expanded the range of banks able to offer such loans to all financial institutions, such as joint-stock banks.
Developers will also need to have at least 10 million yuan (US$1.4 million) of registered capital.
China has long tried to boost incentives for companies to build cheaper housing.
Housing prices have risen rapidly in recent years, with the housing index for the country's 70 main cities up 10.2 percent in the fourth quarter of 2007 from a year earlier.
Affordable housing is defined as homes with a floor area of less than 60 square meters.
By the end of last year, banks had lent 50.89 billion yuan to developers of affordable housing.
(Shanghai Daily February 5, 2008)