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Mortgage Rates Should Allow Greater Role For Market Forces

CHINA PRESS
MNI (BEIJING)

Chinese mortgages need more flexibility by allowing market mechanisms to determine interest rates, which would help overcome recent problems with prepayments, according to Liu Xiaochun, Vice President of Shanghai New Finance Research Institute. Writing in Yicai.com, he explained regulation of the industry should not directly limit the interest rate, and parties should be allowed to re-negotiate terms of the mortgage according to the market situation at the time. Any blanket move to lower the interest rate of existing housing loans would bring risks to the banking industry, but by allowing a market orientated approach, the sector can abandon its the "one-size-fits-all" approach.

MNI Beijing Bureau | lewis.porylo@marketnews.com
MNI Beijing Bureau | lewis.porylo@marketnews.com

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