China's banking regulator has formally issued new regulations on housing loans that tighten avenues of credit as part of an ongoing package of measures to cool the sector and the economy as a whole, Shenzhen Daily reported Monday.

The China Banking Regulatory Commission (CBRC), which first published a draft of the pending rules in February, stipulated that developers would now have to put down 35 percent rather than 30 percent of a real estate project��s total value.

Retail investors must place a 20 percent downpayment on a property��s ticket price, while individual loan applicants must ensure that monthly expenses do not exceed 55 percent of their total income instead of 70 percent.

The rules apply to State-owned commercial banks, joint stock banks, city commercial banks, rural credit cooperatives, policy banks, as well as foreign banks, the CBRC said in a statement Friday.

The government has launched a series of macro-control policies since the second half of last year to slow China��s economy, especially in sectors deemed to be rapidly overheating, such as real estate, steel, cement, aluminum and autos.

Regulators said the guidance would help commercial banks to better recognize, measure, monitor and control risks in lending to the country��s real estate sector and promote the long-term healthy development of the housing loan market.

Outstanding bank loans to real estate developers rose 25.3 percent annually between 1998 and 2002, while outstanding loans to individual consumers rose 113 percent year on year between 1997 to 2002, it said.

The statement added that in 2003 and the first half of 2004 outstanding loans to both property developers and individual consumers maintained fast growth rates.

It warned that banks�� non-performing loans would increase substantially once the real estate market turns bad, as most property developers rely heavily on bank loans.

Source: Shenzhen Daily/Agencies