Money

Stress tests not signals of policy change: CBRC

(Xinhua)
Updated: 2010-08-06 15:52

China's banking regulator on late Thursday said the hypothetical situations in the risk tests of banks, such as a possible slump in property prices, does neither indicate the regulator's judgment on the property market nor possible changes in government property policies.

The China Banking Regulatory Commission (CBRC) reaffirmed in an online statement that it allows banks in regions with soaring property prices to suspend loans for third homes according to their assessment on credit risks.

Related readings:  China said to test banks for 60% home-price drop  Stress tests to test lenders  More realty curbs unlikely: experts  Outstanding loans to property market up 40% by end of June

The CBRC also said the down payment and the lending rate for third homes mortgage loans should be raised, but the specific amount should be determined by banks.

The declaration was made in response to domestic reports that the CBRC had ordered banks in Beijing, Shanghai, Shenzhen, and Hangzhou to stop issuing loans to third home buyers.

According to Bloomberg's Thursday report, the banking regulator had told lenders to include worst-case scenarios of prices dropping 50 to 60 per cent in cities where they have risen excessively, which signaled that the government might be growing more concerned about the health of the real estate market.