Regulatory Commission China Banking appealed to Chinese banks, with a recommendation: increase in "significant quantities" interest rates for a third mortgage and down payment if they have no confidence in the intentions of the borrower. Applications "people who buy homes in investment and speculative purposes," should be rejected. Earlier, Chinese authorities have identified the minimum initial contribution - 40%. So the Chinese government hopes to limit the excessive rise in prices in the market.

Banks are encouraged to stop lending to developers, if it turns out that they accumulate land or intentionally delaying the sale of real estate. It was also instructed to take steps to repay earlier loans. The Commission warned lenders about the risks associated with the "easy money" coming in the real estate market. According to some reports, China had begun to increase in mortgage defaults.

growth of loans up to $ 1.4 trillion. in 2009 sparked a boom in Chinese real estate market. In December, prices in 70 cities rose the fastest pace in 18 months. According to the Commission, the inflow of capital into Chinese assets increased markedly, as investors began to conduct operations carry trade. Strategy carry trade is borrowing in a country with low interest rates, followed by transfer of funds into the currency of another country, where the stakes are higher, and allocated funds for a higher bid.

Chinese authorities have found a sharp increase in speculative real estate, with the participation of foreign nationals. In 2009, in Shanghai for almost 40% of buyers luxury residential real estate valued at more than 10 million yuan were foreigners. The regulator found instances where 38 foreign nationals who have never visited the territory of China, were able to get mortgages in Shanghai Bank, through its agents and lawyers, without providing the necessary documentation.

In January, the State Council of China announced on strengthening control over the market of housing loans, in order to limit inflows of speculative capital from abroad and to cope with "too sharp" increase in property prices in some cities. The government has instructed banks to adhere to the requirements of the initial contribution of at least 40% for borrowers who are taking second and subsequent loans for the "additional property", and to set interest rates based on an assessment of all risks. So credit for the second object housing the Chinese banks must set a rate of 10% above the base. The rate on five-year loans in China is 5.94%. Then the People"s Bank of China ordered banks to increased reserves for credit (the first time since June 2008).

worries of overheating housing market and economy, the Chinese regulators from January 19, introduced quotas on the volume of credits issued by the largest banks in China. Thus, the annual quota for the Industrial and Commercial Bank of China (ICBC) totaled 850 billion yuan ($ 124.6 billion), Chin1000a Construction Bank - 750 billion yuan ($ 110 billion), Agricultural Bank of China - 700 billion yuan ($ 102 billion), Bank of China - 600 billion yuan ($ 88 billion). Regulatory Commission of Banking ordered several major banks not to issue new loans until the end of January.

In the first half of January, the bank granted loans at 1.45 trillion. yuan ($ 212 billion), seeking to have time to earn as much as possible before the quota will come into force. Only the Bank of China has granted loans of $ 23.5 billion the banking committee head Liu Minkan said that banks were requested to reduce lending to a record $ 1.4 trillion. Issued in 2009 to $ 1.1 trillion. These measures should prevent further overheating of the real estate market, prices at which in 2009 amounted to 7,8%.

largest banks in China have begun to implement government directives to prevent the inflation of bubbles in the stock market and real estate market, began to reduce their lending and raising rates on mortgage loans. Industry Leaders Bank of China and ICBC revoked part of loans to mid-January, and reduced the amount of new issuance. Bank of China has tightened the conditions for granting loans for mortgages - reduced the discount to apply for a loan for the first time from 30% to 15% and increased the amount of down payment to 40% to apply again. However, other commercial banks have not yet followed the example of the market leaders.

index of real estate in the Shanghai Composite dropped the other day at 1%, its lowest level since April 29, 2009, an independent economist Andy C, who previously worked at Morgan Stanley, said that the real estate market bubble may soon burst, because the credit mass decreases. In his view, by a decline in bank lending in China is hard to talk about the future of maintaining such a high demand for real estate.

Huainan Zhao, professor at Cass Business School believes that the Chinese authorities will be able to quickly restore order on the property market. According to him, the bubbles in Chinese real estate markets swelled in the past, but the government managed to extinguish them. That was in 2007 when some cities Shenzhen prices overnight fell 50%. Huainan Zhao contends that speculators in China is very sensitive to changes in state policy. "Feeling the intention of the authorities to cool the property market, they stop their operations and sell. Causes of the current overheating of the program lies in stimulating the economy by 4 trillion. Yuan (U.S. $ 586 billion.) Prices for the real estate market have exceeded the peaks of 2007 and is now a good time to cool the ardor of speculators ", - the expert believes.

Professor, University of International Business and Economics Lai Pinyan believes that such a restrictive policy, which sell power, and can protect the country from a sharp rise in property prices. He said the rapid growth in the real estate sector and prices of apartments and houses do not allow 85% of Chinese families to acquire their ownership. "The tightening of restrictions on the mortgage must be reflected in housing prices, especially in regions such as Hainan," - says the analyst of Japanese bank Nomura Mei Yan.

"credit crunch should calm the situation. Measures to restrict lending should not freeze the economy. If the State will notice signs of weakening economic growth, measures to be followed by immediate heating of the economy", - the expert said Vanessa Rossi Chatham House. In her view, the real results of the new policy can be seen near the end of 2010

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