China's central bank denies banning commercial banks on home loans

China's central bank has not banned commercial banks from issuing personal home mortgage loans, it said on Tuesday, although the country has stepped up efforts to rein in house prices.

A report by Sw2008.com on Tuesday incorrectly claimed that some banks had been required by the central bank to suspend home mortgage loans, according to the People's Bank of China.

Starting Tuesday, however, both the minimum downpayment on property in Shanghai and loan interest will be increased, while banks have been ordered to tighten their purse strings, according to a notice issued Monday by Shanghai's housing and banking authorities.

First-time home buyers in Shanghai must pay a minimum 35 percent deposit on purchases, the downpayment on second homes will be increased to 50 percent, and buyers of commercial properties must now pay a minimum 70 percent deposit.

Meanwhile banks have been ordered to raise interest rates by 10 percent for second-time borrowers from the government's Housing Provident Fund. The maximum amount people can now borrow from the fund has been lowered by 100,000 yuan (14,492 U.S. dollars). In addition, people can only receive a loan from the fund twice.

Source: Xinhua