economy - Forcefull cooling of the real estate

Banks are asking down payments of up to 60 percent for real estate, writes expert Sam Crispin in Chinabiz. The newest development in cooling down real estate is certainly going to be effective. Down payments used to be 20 percent and new guidelines suggest 35 percent, but the banks seem to have reversed the trend to fuel real estate with unprecendented amounts of new mortgages.
"I had a client with an annual income of two million Renminbi, who could not get a mortgage on a house of two Renminbi," says a disgruntled real estate agent.
The new strict policies might not only trigger off a bust in real estate, they will also change the performance of the state-owned banks. Over the past few years the percentage of non-performing loans could go down, because the amount of new loans broke records every months. In that way the total of outstanding loans looked - at least on paper - much healthier. That trick cannot be used anymore.