BEIJING (XFN-ASIA) - Chinese banks have been warned by the government to
impose stricter mortgage lending criteria, the Financial Times reported.
The report said Liu Mingkang, head of the China Banking Regulatory
Commission, has been pointing out risks in the real estate market to state banks
and ordering them to tighten their loan approval processes.
Average house prices in China's 70 largest cities were up 10.2 pct from a
year earlier by the end of June. But sales volumes in Shanghai, Beijing and
Shenzhen, have fallen in recent months.
"If financial institutions of Freddie Mac and Fannie Mae's caliber could get
into such a bad situation, then what does that mean for Chinese financial
institutions?" said Yi Xianrong, an economist at the China Academy of Social
Sciences. "The only reason we haven't seen similar problems here is because
property prices have continued to rise rapidly."
"Anyone can get a mortgage loan in China, no matter who they are," Yi added.
"There is also a huge amount of speculation in the market and insider dealing
when it comes to bank officers granting loans."
andrew.pasek-vanburen@xinhuafinance.com
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