On September 30, China’s Central Bank proclaimed that “the minimum interest rate for personal housing loan will be lowered to 30% off," touching off an uproar in the whole market. As of now, there are at least four banks in Nanjing having released a policy of a minimum interest rate discount of 5% off, but per the actual implementation, higher barriers to entry as well as the “arbitrary provisions” made by the developers will keep most people away from the “5% off” favorable policy.

The policy with a minimum interest rate of 5% off has begun to enter the implementation stage in four banks, but most customers still can only apply for loans at the “benchmark interest rate”.

After investigating several bank credit departments in Nanjing, the reporter found that, currently, there are BCM, Zijin Rural Commercial Bank (“Zijin”), Citigroup and CMB having implemented the policy of 5% off interest rate. However, except Zijin, the barriers to entry set by the other three banks are very high, which are only available for high-quality customers. “Although the minimum threshold set is 5% off, only the extremely high-quality customers can enjoy this preferential treatment, which is very harsh. For example, only the VIP customers with deposits of more than 500,000 yuan can apply for such a discount loan. Even so, they are not a hundred percent certain about its result. Therefore, we now usually declare that we are still implementing the benchmark interest rate,” said a credit manager from BCM.

A real estate consultant from Banqiao told the reporter that, BCM is one of the banks cooperating with their real estate. Although the interest rate has been lowered to 5% off, the barrier to entry is still very higher, which is not only limited by the income level of the house buyers, but also requires that they must have bought some certain financial products from BCM. In short, there are few people that can meet the requirements. As far as he knows, all the customers of their real estate can only apply for loans at the benchmark interest rate rather than enjoy the preferential treatment at 5% off interest rate so far.

A financial manager from a commercial bank in Nanjing said that the approval of the banks on high-quality customers is very strict. Stable income as well as good credit history is basic requirements. But the fact is that most of these people are “upgraders” with the burden of “loans”, so the interest rate discount is mainly for the first homes. Thus, few people can apply for the discount loan at 5% off interest rate.

Zijin declared that it is known for its lowest threshold compared to the other banks in the city, but the 5% off interest rate is only available for its cooperative real estate customers.

Mr. Wang bought an apartment from a certain real estate in Jiangning last month with only 30% of down payment paid currently. However, to apply for a discount loan, Wang has been waiting for nearly a month.

 “I once asked Zijin about the interest rate discount, which is 5% off. It’s good, and I wanted to apply. But the developer told me that I could only apply for a loan from the cooperative bank of its real estate. I had no choice but to apply for a loan from the bank chosen by the developer at the benchmark interest rate, for which I have to pay more 30,000 yuan,” Wang told the reporter with regret.

A staff from Zijin's Credit Department told the reporter that, at present, only Zijin offers the lowest interest rate threshold. A good credit history is a golden ticket for the application for a loan at 5% off interest rate. But the problem is that only real estate owners can enjoy this treatment, and personal applications won’t be approved. Even for the second-hand housing buyers, such a policy is also only available for some residence communities. “Even if we accept personal applications now, they still won’t be approved by the developers. So, you need to obtain the consent of your developer first.”

A project manager of a certain national housing company explained the secret of the interest rate setting to the reporter, “As the end of the year approaches, every real estate company is under a lot of pressure when coming to the withdrawal of funds. Recently, we not only ‘suspend' the policy on housing provident fund loans, but also make more efforts to protect the cooperative banks by not allowing the customers to apply for loans from other banks. Comparatively speaking, applying for loans from cooperative banks can not only reduce the costs of pre-lending audit and later supervision, borrowers can get the money faster. Although it’s not very fair for the house buyers, but to make the funds withdraw faster, it’s a necessary action.”

The 5% off interest rate policy will be expanded at the end of this month or later, and then a unified standard will be carried out for all customers

Earlier views show that China’s Central bank has determined a minimum interest rate, “which is 0.7 times of the benchmark interest rate for loans,” but the fact is that 5-10% off interest rate policy will be carried out for all banks. A credit manager from ICBC told the reporter that they may soon implement the 5% off interest rate policy, “Whenever a house buyer come to apply for a loan, we always advise them to wait, because the new policy which can offer some discount will be finalized and become law imminently, maybe this month, or at the end of this year.” The personal credit loan manager from CIB also told the reporter that they may implement the new policy offering 5% off interest rate this month or later. A credit manager from ICBC added, “Joint-stock banks and local banks will set different interest rate thresholds for customers of different credit levels, but the four major banks (i.e., BOC, ABC, CCB and ICBC) are usually unified in terms of the assessment of the customers.” A credit manager from BOC also told the reporter that if the interest rate discount is available, all customers will be treated equally.