Home loan rates are going up in Beijing and other big Chinese cities as the government tries to discourage people from buying property with huge loans. The rate increases target new borrowers – those with existing mortgages will not be affected. China’s big four state banks – the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and the Bank of China – began earlier this month charging 105% of the benchmark rate to first home buyers in Beijing. Smaller banks have started charging 110% of the benchmark rate to first home buyers in Beijing, while the Beijing branch of Baoshang Bank is charging 130% of the benchmark rate. The only bank still offering mortgages at an interest rate below the benchmark is the Beijing branch of HSBC – with a 1% discount to the benchmark, according to retail banking information website Rong360.com.

Chinese banks can in theory decide how much they charge for mortgages, but in practice the government tries to control the housing market by deciding how much banks can lend homebuyers and how much they can charge in interest on those loans. Home loan rates in Beijing and other big cities such as Shanghai, Shenzhen and Nanjing have been going up in tandem with property prices, which the government is struggling to contain.

Real estate prices in China’s big cities have been climbing at an almost unstoppable pace since the government began allowing private ownership of homes in 1998, and Beijing and Shanghai are now ranked among the top 10 most expensive cities in the world. But there are signs the market is cooling. Meanwhile, downpayments are also going up. In Beijing, the minimum downpayment for a first home was raised to 35% in 2017, and for a second home it went up to 60%. Across the country, total bank loans for property amounted to CNY30 trillion at the end of June – of which CNY20 trillion were mortgages.

Authorities in of Beijing are trying to get people to rent homes as part of their efforts to keep surging property prices in check, but they may be fighting an uphill battle in a society where owning property is highly valued.

New measures were introduced to cool the property market in five cities. Property owners in Chongqing, Nanning (Guangxi), and Nanchang (Jiangxi) must now wait two years before they can resell flats, regardless of whether they are new builds or older homes. In Changsha (Hunan), newly purchased flats cannot be resold for three years, while in Xian (Shaanxi), property owners need approval from the authorities to resell. The four provincial capitals all have populations of more than six million people, while Chongqing municipality – which is directly administered by the central government – is home to more than 30 million. Some of the cities have also restricted the number of properties that can be bought to one per household over a period of two or three years, among other curbs.