CHENGDU, Aug. 14 (NBD) -- The average mortgage rate for first-time homebuyers in July rose to 4.99%, 1.02 times of the benchmark interest rate, according to the latest mortgage report released by Rong360. Mortgage rate discount has almost become a thing of the past for first-time homebuyers in China.

Among the 533 banks surveyed in 35 cities, 160 banks have raised mortgage rates. More than 90% of these 533 banks have stopped to offer mortgage rate discounts for first-time homebuyers. Of them, 364 banks maintained benchmark interest rates while 126 banks raised the metric, and 20 bank branches halted mortgage lending services.

While for the mortgage rates for second-time buyers, only 4 banks maintained benchmark rates. Four hundred and twenty-two banks raised benchmark interest rates by 10%, while 10 lifted by 15%, 67 by 20%, and another 10 by 30%.

Rong360 analyst Li Weiyi says that it might be caused by the time lag effect of the tightened mortgage lending rules in May. He predicted that the average mortgage rates for first-time and second-time homebuyers will be narrowed but still different.

Yan Yuejin, researcher from the think tank center of the E-house China R&D Institute, holds that tight financial conditions drives up lending costs, as a result, buyers have to pay more to cover their loans.

In fact, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications even raised benchmark interest rates by 5% for first-time homebuyers in Guangzhou.

Notably, mortgage rates in second-tier cities for first-time homebuyers rose even more significantly. For example, the rates in Nanning stood at 5.12%, at 5.09% in Wuhan, 5.07% in Ningbo, 5.03% in Nanjing, and 5% in Fuzhou.

Mortgage rates of second-tier cities have risen considerably since April, with the average rates in many cities exceeding 5.00%, even higher than that in first-tier cities. But Li Weiyi holds that average mortgage rates in both first- and second-tier cities will not go up all the way, but to be kept in a proper range instead.

However, some analysts predict mortgage rates will keep moving up as a result of tight liquidity and higher lending costs. 

Email：tanyuhan@nbd.com.cn