Residents select houses at a sales center of a real estate company in Huaian, East China's Jiangsu Province on Sunday. As China's domestic coronavirus control has made progress, local real estate companies have opened while observing strict measures against the virus. Photo: cnsphotos

China's central bank branch in Shenzhen, South China's Guang-dong Province on Monday issued a notice that it will investigate illegal loans which poured into Shenzhen's property market in re-sponse to hiked house prices in the city.

The notice suggested commercial banks in the jurisdiction self-inspect housing loans in the real estate market since the beginning of this year. 

The investigation comes after reports of alleged investor specula-tion in the real estate market, and that loan relief policies aimed at helping small and medium-sized enterprises (SMEs) during the coronavirus pandemic had been taken advantage of. 

According to insiders, enterprise owners can make use of the poli-cies to stock up on houses.

After a house is fully paid for, it can be used to mortgage a low-interest loan. As long as a residential or business property is owned under the name of an individual, they can apply for a loan to the value of 70 percent of the house price with an annual interest rate between 3.9 and 4.5 percent. The interest rate can be as low as 2 percent when combined with interest discounts for SMEs during the pandemic.

The investigation is set to examine the authenticity of enterprises involved, how long the borrowers have held their mortgaged properties, and when the enterprises were established.

It will also look into new properties purchased by borrowers and used against mortgages since the coronavirus outbreak, and appli-cations for loan subsidies.

The investigation will help standardize loans and ensure that more funds reach enterprises hurt by the coronavirus pandemic, Yan Yuejin, research director at the E-house China R&D Institute, told the Global Times on Tuesday.

In March, commercial property prices expanded in 70 large and medium-sized cities, and Shenzhen leads the nation with 1.6 per-cent month-on-month growth, according to the National Bureau of Statistics.

Global Times