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Interest rate hike hits ordinary people

04-07-2011 08:23 BJT

Higher interest rates may encourage savers to keep more money in banks, and reduce demand for mortgages. Yuan Xiaoyuan takes a look at what the increase means for ordinary people.

Banks are extremely busy in Beijing on the first day of the interest rate rise. Most people have the same idea.

"The interest rate is higher now. I want to save as much money as I can."

Some are even breaking the current deposit term they have, to open new accounts at the higher rates. But bank staff say most customers are more rational.

Wang Rujing, ICBC employee said "Those who come to make deposits are mainly the elderly. There are fewer than the first interest hike in February. People have got used to the frequent rate rises."

Higher rates can be good news for some, but maybe not for home buyers. Loan rates over five years have risen from 6.6% to 6.8%. That means a property buyer who took out a one million yuan loan over 20 years will have to pay almost 120 yuan more a month. Adding 20 years together, that's another 30 thousand yuan.

But experts believe the move will benefit China's property market in the long-term, reducing the bubble.

Zhao Xijun, Vice Director of School of Finance, Renmin University said "The interest rates hike is a measure to cool down the over-heated housing market, and curb property prices."

But experts also warn of the higher pressure on mortgage payers. They suggest home buyers choose their mortgage according to their financial situation.

Editor:Xiong Qu |Source: CNTV.CN

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