Shanghai suspends home decoration loans

Loans for home decorations have been temporarily suspended in Shanghai, as the city implemented a housing fund programme to clamp down on unscrupulous practices of some estate agencies, according to the Wenhui Daily, citing sources from the Shanghai Provident Management Centre.

According to the report, loans for home-decoration purposes have already been suspended since this week, after it was uncovered that more estate agencies have been asking for extra charges of between 3,000 yuan and 5,000 yuan, or about US$442 to US$737, for either helping borrowers obtain loans at more than the amount they are qualified for, or getting unqualified clients loan approval from the management centre.

Under Shanghai’s public housing fund, mortgage rates are more favourable compared to those offered by several commercial banks. Interest rates on more than five-year mortgages is 3.87 percent under the public housing fund, while it's 5.94 percent for commercial banks.

The maximum amount borrowers can obtain for loans for home-decoration purposes in Shanghai is currently at 300,000 yuan.