SPFM No. 18 (2016)
To: Shanghai Provident Fund Management Center:
To pursue and further promote the orderly, steady and healthy development of the Municipality’s property market by reining in lending risks for fund safety and tightening up management of differentiated lending, we hereby notify you of adjustment to this Municipality’s housing provident fund home loan policies as follows:
1. Strengthen differentiated housing provident fund lending policies alignment review
(1) The paying employee family having no home or provident fund loan records in the Municipality is qualified for housing provident fund home loan application based on the criteria for first home buyer. The paying employee family having no home, or having been granted provident fund loan once, or qualified for buying the second home for ungrading is eligible for applying for a provident fund loan for purchase of the improvement oriented second home.
(2) Barring home loans to the applicants under the following circumstances:
I) the paying employee family having been granted twice previously with provident fund loans as recorded;
II) the paying employee family buying the non-improvement type second home;
2. Tweak lending policies for the improvement-oriented second home buyers:
The differentiated provident fund credit policies remain unchanged for those eligible first-time home buyers.
As for upgrading and buying the second home, the provident fund mortgage rates shall be raised by 10% above the prevailing mortgage rates for first-time home buyers. The maximum amount of the loan issued to a family shall be 800,000 RMB yuan (i.e., 400,000 RMB yuan for each individual), or one million RMB yuan if additional provident fund is applicable (i.e., 500,000 RMB yuan for each individual). The mortgage down payment on the second home must not be less than 50% of the home’s sales price for purchase of an ordinary home, or 70% for a non ordinary home.
3. Make adjustments to the ratio for calculation of the provident fund loan repayment capacity, and the coefficient of the provident fund account balance for calculation of the maximum loan size: After adjustment, the Municipality’s provident fund loan repayment capacity shall be calculated based on 40% of the ratio of the monthly loan principal repayment amount to the monthly salary basis, and the maximum provident fund loan size shall be capped at 30 times the provident fund account balance, and 10 times the additional provident fund account balance as applicable.
4. Ramp up the buyer’s funds for down payment verification review and credit check. The municipal provident fund center should require its entrusted entities (i.e. quasi-underwriters) to further tighten control over the loan applicant’s family credit and repayment capacity check as well as the reviewing process for verification of the buyer’s funds for down payment, particularly those with adverse credit records, prohibiting and preventing those borrowers with outstanding provident fund loans from provident fund withdrawals for any purposes other than loan repayment.
The above-mentioned adjustments in this Notice shall become effective as of 29 November 2016.
Shanghai Housing Provident Fund Management Committee
28 November 2016