Banks are also asked to step up checks on whether borrowers qualify to buy a home, and to improve the monitoring and interception mechanism for the use of such loans

Financial authorities in China’s Shanghai have tightened regulations on banks issuing individual housing loans, in an effort to ward off property bubbles as the market heats up.

Commercial banks in the city should inspect their consumer loans, business loans and mortgages issued since last June and submit reports on them to the regulator before Feb. 28, the Shanghai Office of the China Banking and Insurance Regulatory Commission said on Friday.

Banks should strictly scrutinise the source of downpayment funds and the solvency of home buyers, and can only issue mortgages to individual for purchase of homes that are close to completion, the regulator said in a statement on its website.

Banks are also asked to step up checks on whether borrowers qualify to buy a home, and to improve the monitoring and interception mechanism for the use of such loans, in a bid to ban other forms of loans from illegally flowing into the property market, according to the regulations.

The financial hub recently imposed a slew of tougher restrictions to rein in a buying frenzy in its residential property market that saw sales by volume hit a nearly four-year high.

Source: Reuters

(The story has been published from a wire feed without modifications to the text. Only the heading has been changed)

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