Economy

China ups public housing fund mortgage rates

(Xinhua)
Updated: 2011-02-10 10:09

BEIJING - China's Ministry of Housing and Urban-Rural Development will raise the Public Housing Fund (PHF) mortgage rates for home buyers starting Wednesday.

The rate for loans with a maturity of five years or more under the PHF scheme will be raised from 4.3 percent to 4.5 percent, up 0.2 percentage points, while rates for loans with a maturity of five years or less will be raised from 3.75 percent to 4.0 percent, up 0.25 percentage points, the ministry said in a statement released Wednesday.

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However, in cities where the PHF is used for affordable housing projects, the rate for loans will be 10 percent higher than the set rate for loans with a maturity of five years or more, according to the statement.

The hikes come after China's central bank announced Tuesday to raise benchmark one-year borrowing and lending rates by 25 basis points to curb inflation.

China's Ministry of Housing and Urban-Rural Development last year carried out a scheme in 28 second- and third-tier cities to use public housing capital to fund affordable housing projects.

China launched the PHF scheme in the 1990s to help medium- and low-income workers buy homes. Employees are required to contribute 5 to 12 percent of their income to the fund while their employers contribute the same amount.