China set to crack down on loans for home downpayments

Beijing

CHINESE regulators plan to impose new rules to end the practice of homebuyers taking out loans to cover downpayments, as they step up scrutiny of financing risk in the property market, according to people familiar with the matter.

The rules will bar lenders including developers, housing agencies, small-loan companies and peer-to-peer networks from offering loans for down payments, said the people, who asked not to be named because the matter isn't yet public. Regulators including the central bank and the China Banking Regulatory Commission will also ask commercial banks to scrutinise mortgage applications and reject those where down payments come from loans offered by such institutions, the people said.