Beijing has put a cap on the amount one can borrow from the Housing Provident Fund, linking it with the period of the borrower’s payment, Securities Daily reported.

In China, the Housing Provident Fund requires employers and employees to contribute to a pool which is later used to make mortgage loans to participants.

From September 17, Beijing residents can borrow 100,000 yuan (US$14,583.21) from the fund if they have contributed to the pool for a year. The maximum loan is 1.2 million yuan.

Xia Lei, vice president of Evergrande Research Institute, thinks Beijing hopes to encourage residents to consider renting houses first then buying houses. Alternatively, the Beijing Housing Provident Fund Center is also suffering from a lack of funds.

Xia further points out that some cities with insufficient Housing Provident Funds may follow the policy of Beijing, but it is not necessary to take it as a tightening of housing regulations.

Xia believes the adjustment will have no real impact on the Beijing real estate market, because the ceiling of the fund loan is 1.2 million yuan, and buyers in Beijing mainly rely on commercial loans.