Apr 12, 2012
Translated by Zhu Na

According to a report in today's Beijing News, aside from two large state-owned banks, the Bank of China and Agricultural Bank of China, many other banks including small and medium-sized banks such as the China Merchants Bank, Citibank, HSBC and other foreign banks have begun offering mortgages for cheaper rates to first-time home buyers.

A person working in retail banking at HSBC told the newspaper that as long as the loan is for more than one million yuan, customers can apply to get a loan at a rate that is 15 percent less than the current benchmark rate, but if the amount is less than one million yuan, the discount will vary according to the applicant's financial circumstances.

If customers who apply for a mortgage are judged as being well qualified, then the 15 percent discounted rate can be offered.

First home buyers can save hundreds of yuan a month in mortgage payments if they manage to get a loan at the discounted rate.

For example if someone took a loan for a million yuan to be paid off over 20 years at a 15 percent discount of the current benchmark rate, they would be required to pay almost 7,160 yuan a month, some 623 yuan less than the 7,783 yuan they'd be required to pay at the benchmark rate.

Over the course of the loan, they'd also pay 150,000 yuan less in interest.

Chinese banks have some flexibility when it comes to setting mortgage rates, with regulators allowing banks to offer discounts of up to 30 percent on loan rates for first-home buyers.

Most banks stopped offering discount rates at the start of last year but in 2009, many banks were offering discounts as large as 30 percent.

The People's Bank of China, the country's central bank, last adjusted interest rates in July 2011 when it raised one-year yuan lending rates to 6.10 percent from 5.85 percent. For loans that extend for more than a period of five years, the current benchmark rate is 7.05 percent.

For those buyers who participate in China's public housing scheme, a system set up in the 1990s which involves employees and employers contributing to a special fund, can enjoy benchmark lending rates for a loan of over 5 years as low as 4.90 percent.

Recently, the "big-four" state-owned banks have also made efforts to improve the speed with which they make a decision on whether to approve a loan.

Currently, the China Construction Bank says that it only needs 2 weeks to decide whether to approve a mortgage application.
 
The processing time at the Industrial and Commercial Bank of China and the Bank of China is approximately one week.

In contrast, in the second half of last year, loan applicants were required to wait for between one and two months for approval.

Links and Sources
The Beijing News: 首套房房贷利率85折优惠面扩大
Beijing Evening News: 京沪等地首套房贷利率85折 回应：受惠群"非常稀少"