Banks get prepped for property plunge

09:59, August 19, 2010      

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China's banking regulator has told banks in Beijing to test for the impact of a plunge in property values below what is owed on mortgages, a local newspaper reported Wednesday.

The order to examine any potential damage from negative equity in the real estate market is the latest effort to probe for banks' vulnerability to a crash in housing prices.

The Beijing branch of the China Banking Regulatory Commission told lenders in the capital city to particularly monitor for risks in mortgages that have funded purchases of second homes, which are typically seen in China as speculative investments.

The report by the 21st Century Business Herald cited an unnamed executive at a State-owned bank in Beijing.

China's real estate market has cooled in recent months under the weight of a package of government policies to rein in soaring prices, though the latest figures show that prices have yet to decline.

Source: Global Times

(Editor:黄蓓蓓)

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