Raises of first-home mortgage rate shadow china's real estate market

Banks in China's major cities have started raising mortgage rates for first-home buyers, putting further pressure on prospective buyers and the real estate market.

China Construction Bank, China's second largest state-owned bank by market value, on Oct. 15 announced an increase of its mortgage rate for first-home buyers to 1.05 times of the central bank's benchmark lending rate. China's commercial banks in at least 14 major cities also have lifted the rate by 5 to 10 percent.

Before 2010, it was common practice for Chinese banks to offer first-home buyers a discount of 30 percent off the benchmark mortgage rate. The discount was then gradually reduced to 15 percent in mid-2010, and then canceled in early 2011.

The total mortgage payment for first-home owners has increased up to 40 percent from previous discounted rates.

Source: XinhuaNet.com