People’s Bank of China Encourages Affordable Housing

Beijing–The central bank of China ordered commercial lenders to ease loan restrictions for affordable housing developers, the Economic Times reports.The People’s Bank of China said last week that banks are able to extend loans for affordable housing if the developers raise 30 percent of the total capital–previously, the requirement for more expensive homes was 35 percent.As China’s real estate market has grown, the government has been trying to offer incentives for builders to provide affordable housing. The central bank raised the lending period from 3 to 5 years and said that banks now can lend to affordable housing developers at interest rates as low as 90 percent of the benchmark lending rate, currently 7.47 percent a year.In addition, the People’s Bank of China and China’s banking regulator also increased the amount of banks that are allowed to offer affordable housing loans from just state-owned banks to all financial institutions.China has tried to halt loan growth at last year’s rate as part of a monetary restriction effort, which reduced credit growth in the fourth quarter. The country’s housing prices have increased significantly in recent years.