Money

China raises Public Housing Fund mortgage rates

(Xinhua)
Updated: 2010-10-21 10:24

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

Rate for loans with a maturity of five years or less under the PHF scheme would be raised from 3.33 percent to 3.5 percent, up by 0.17 percentage points, while rates for loans with a maturity of five years or more would be raised from 3.87 percent to 4.05 percent, up 0.18 percentage points.

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The PHF mortgage rate hikes comes after China's central bank announced Tuesday it would raise the benchmark one-year lending and deposit rate by 0.25 percentage points each, effective on Wednesday.

Established in the 1990s, the PHF scheme was designed to help medium- and low-income workers to buy homes. Employees are required to contribute 5 to 12 percent of their salaries to the fund, with their employers contributing the same amount.

PHF mortgage loans carry lower rates than commercial mortgages. Bank loans with a maturity of five years or more, for example, now carry a rate of 6.14 percent in China.