Rates Also Up in China

The public housing fund in China raised its mortgage rates to buyers by more than 10%, with different products receiving different rates. The rate for a mortgage with maturity in less than five years was raised to 4.14, nearly 0.40 basis points less than those that mature in more than five years. One year loans are still the highest product, with a rate of 5.85 percent, while deposit rates remained untouched.

A rapid expansion of loans and investments caused the housing market to heat up, leading to the rate hike by the central bank. The hope is that the rise will stabilize the market and a limited impact is expected for housing mortgages. The fund, originally established with low to moderate income borrowers in mind, has spread to the real estate market in major cities. The fund allows borrower to have matching contributions from their employers towards their mortgage and are required to contribute a percentage of their salaries to the fund.