HONG KONG, March 16 - China's central bank said late Wednesday that it was raising the interest rate on mortgages, after more signs emerged that the country's economy might be growing at an unsustainable pace as property prices soar.
The minimum interest rate for housing loans of five years or more will rise to 5.51 percent, from 5.31 percent. Banks will also be encouraged to require down payments equal to 30 percent of the purchase price, instead of 20 percent, in cities that have experienced especially rapid appreciation lately, the People's Bank of China said in a statement on its Web site...
The moves come a week after Shanghai began assessing a capital gains tax of 5.6 percent on real estate bought and sold in less than a year, and after delegates to the National People's Congress in Beijing expressed worries in the last week that real estate speculation was becoming out of control and making housing less affordable.
Real estate prices have been climbing even faster in China than in the United States, with urban prices escalating 10.8 percent in the fourth quarter after an increase of 8.6 percent in the third quarter. Prices have been rising still faster in Shanghai, where overseas investors have been buying up apartments hoping to profit not only from rising prices but also a possible increase in the value of China's currency against the dollar.
That combined with an expected 7.9 % rise in China's oil demand means that the US, when all is said and done, pales in comparision to elsewhere as an investment location.
Well, gee, thanks George W. Bush. Americans are getting impoverished, but at least oil and Chinese real estate are going gangbusters.