LOCAL residents will spend more time comparing housing loan rates from different commercial banks, now that China's central bank has raised the minimum mortgage lending rate and has allowed banks to set their own interest rates at or above that level.

　　The People's Bank of China announced on March 16 that the interest rate on a housing loan with a maturity of five years was levered up to 5.51 per cent from the previous 5.31 per cent.

　　The Shanghai branch of the China Construction Bank said they will mainly adopt the 6.12-per-cent base rate - the standard lending rate for other bank loans - for mortgages, while other banks in Shanghai were still considering their own interest rate levels on March 23, according to the Shanghai-based Jiefang Daily.

　　Analysts say the adjustment to the preferential mortgage rates for house buyers shows that authorities are taking additional efforts to cool the country's sizzling property market by curbing demand.

　　"The move is targeted at speculators rather than residents buying houses for their own use, as the hike is moderate," said Albert Lau, managing director of Savills Shanghai, a London-listed property agency.

　　The measure would reduce long-term risks in the property sector, as speculation with credit is expected to be curbed, Lau added.

　　Besides raising the interest rate, the central bank also said banks could request a minimum down payment on a house of 30 per cent of its purchase price, up from 20 per cent, in cities where property prices are rising quickly.

　　Some high-end house buyers in Shanghai will have to put down 40 per cent of the purchase price since the central bank issued the new policy, the Shanghai-based Youth Daily reported.

　　The central bank said the new rules would "help banks strengthen risk management', as many bank loans have poured into the country's red hot property market in recent years.

　　A total of 1.651 trillion yuan (US$199.6 billion) of housing loans were borrowed from lenders in China, accounting for 23 per cent of the total middle and long-term loans of those banks.

　　Only 0.12 per cent of housing mortgages were non-performing loans, a low rate rarely seen in other loan sectors.

　　However, analyst pointed out that the risk of mortgage loans is often exposed three to eight years after money is borrowed.

　　Most of China's individual mortgages were granted within the last three years, so the risk is not yet evident.

　　Analysts say if the moderate interest hike is not enough to dampen speculation in the real estate sector, other measures such as taxes, like those already seen in some parts of the country, would be employed by the central government.