The head of the China Banking Regulatory Commission has asked the banks to “effectively rein in” excessive lending to the real estate sector to curb soaring house prices.

At a policy meeting attended by senior executives of major Chinese banks, commission chairman Liu Mingkang called for “strict scrutinisation” of loans for investment homes, as well as luxury apartments and villas.

The down-payment requirement, as a percentage of the total costs of high-end properties, would be raised, he added, but did not confirm the margin, Xinhua news agency reported.

Earlier media reports said overall down-payments on new homes would be lifted by 20 per cent, but the People’s Bank of China (PBOC), the central bank immediately quashed the rumours.

Liu said the regulator would also focus on the repayment abilities, intentions and records of home buyers.

The National Bureau of Statistics has reported home prices rose 5.5 per cent in the first quarter, compared with the same period last year, despite repeated government calls for a “healthier” development.

Banks issued 1.26 trillion yuan in loans in the first quarter, just over half the annual target set by the regulator.

Last month, the PBOC warned that China’s red hot real estate sector may witness a bubble burst and cautioned against a possible financial turmoil.

The Chinese real estate industry is absorbing too much of the country’s capital, causing government attention, it said. www.newkerala.com

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