Property development lending growth in Shanghai eased last year following tighter controls on the sector, the local banking authority said yesterday.

Rigid controls on individual mortgage loans have had a big effect in Shanghai as individual mortgage lending dropped sharply in the fourth quarter, the Shanghai Bureau of the China Banking Regulatory Commission said.

Individual mortgage started to drop since October, the authority said, without giving detailed figures.

The central bank and the banking regulator require mortgage holders who apply for another home loan to produce a down payment of at least 40 percent and pay a 10-percent premium on interest rates in a September 27 announcement. The requirement on third or fourth mortgage are stricter.

The regulators in December further clear the definition of the second and multi-mortgage by family as a follow-up move to curb property prices. Property development lending growth eased last year while residential property lending dropped sharply, the local banking regulator said.

Property development lending rose 6.8 percent last year to 200.97 billion yuan (US$28 billion) at domestic banks in Shanghai. The growth is 22.6 percentage points lower than the growth a year ago.

Residential real estate lending decreased 26.1 percent to 65.74 billion yuan on China's moves to curb the property industry.

(Shanghai Daily February 19, 2008)