The non-performing loans (NPLs) totaled 518.13 billion yuan in China, down 42.2 billion yuan from the beginning of this year and the NPL ratio was 1.77 percent, down 0.65 percentage point, the China Banking Regulatory Commission (CBRC) announced last week.

Liu Mingkang, Chairman of the CBRC, last week called on banks to strengthen risk control and optimize credit structure to prevent possible financial risks amid a surge of bank loans during a speech at an industry conference held in Beijing.

Liu urged banks to lift the provision coverage ratio above 150 percent this year to prevent possible risks. As of the end of June, the provision coverage ratio of commercial lenders in China was 134.3 percent, which was 10.4 percentage points higher than the end of March.

Qin Rui, a senior analyst with 5i5j, told Xinhua on Thursday that China could not rule out the possibility that loopholes might exist in the process of home mortgage lending, but most banks took a very tough stance on this issue.

Although Shou had tried several banks, the answer he got was the same. He had to pay at least 30 percent of the home price as the down payment and present documents from his employer to prove his income in order to get the mortgage plan approved from the bank.

Hopes for stable price

"After we pay the mortgage in the future, my fiancee and I have to scrimp and save to return the money back to my relatives and fulfill the bank's mortgage plan. I would have around 2,000 yuan left from my monthly salary to pay other bills," Shou said, adding that he was afraid if he did not decide to buy a home quickly, others would vie for them and push the price to even higher levels.

Liu Xiaoguang, former vice president of Beijing Real Estate Association, said that a sharp rise in home prices was not conducive to the healthy development of the property industry.

"The industry regulator needs to take measures to keep the home-price hike in line with the pace of citizens' income rise. The property sector is still in the process of stabilization, so developers should not be over-optimistic about the market," added Liu, the General Manager of Beijing Capital Group, a state-owned property, city infrastructure conglomerate.

Gao Haiyan, an expert with Shenzhen Academy of Social Sciences, told Xinhua that when a full-fledged economy recovery had not been established, the surge in home prices would add pressure to homebuyers, while an accelerated lending expansion might lead to future bad loans.

(Xinhua News Agency July 24, 2009)