According to Li, foreign-funded banks will implement the uniform interest rate stipulated by the People's Bank of China, the country's central bank, the same as Chinese banks do. "But clients may feel the advantages of foreign banks because of our service, so they will choose foreign banks," Li added.

Long lines are a frequent sight at Chinese banks. People also have to suffer from the icy glances of the surly tellers. "In Chinese banks, you have to look for wealth managers by yourself, but in foreign banks, wealth managers center around you," said Xu Bing, a VIP of Standard Chartered. "Compared with Chinese banks, account managers in foreign banks actively connect with the clients and serve them, rather than waiting for the clients to ask for them. If foreign banks provide housing loans for us, I'll choose them without any hesitation."

Although many may be waiting for foreign banks to start offering housing loans, Wang Lei, Senior Manager of the Transaction Management of Midland Realty, said foreign banks won't pose a threat to the domestic housing loan market. In his opinion, the influence of foreign banks on the housing loan market should be analyzed in two ways.

The low-end market is not a likely target of foreign banks, and Chinese banks hold overwhelming advantages in this market, said Wang. Chinese banks can provide products such as accumulation fund loans, commercial loans and mixed loans that already meet the demand of the public. In terms of loans for deluxe homes and villas, foreign banks are highly competitive because they can provide loans in multiple currencies as well as offer quality services and advice to their clients. Take HSBC as an example, said Wang. Most of the home loans it offers are concentrated on villas or deluxe homes with prices in excess of 25,000 yuan per square meter.

This old house

While firmly occupying the high-end market for home loans, some say foreign-funded banks are also eager to have a try at the middle- and low-end markets.

In the present housing loan climate, Chinese banks hold overwhelming advantages, whether the clients choose accumulation fund loans, commercial loans or mixed loans. Particularly, the four state-owned commercial banks occupy the majority of the market.

Furthermore, abundant client networks are necessary grease for the wheel in the housing loan business. Foreign banks just entering the market are in a disadvantageous position when it comes to cooperation with real estate developers and second-hand home agencies. In China, most new buyers must apply for loans in banks designated by real estate developers. This rule becomes an obvious obstacle foreign banks must face.

"Because of risk factors, foreign banks will not provide loans for real estate developers for the moment," said Kang Sheng, general manager of a housing loan guarantee company. "That means they cannot get agent loans for newly built houses. But since loans for second-hand homes do not involve loans to developers, foreign banks can rapidly secure business opportunities just by cooperating with second-hand housing agents."

Compared with new homes, second-hand homes are an easy starting point. More people are choosing second-hand houses as their first choice when buying houses, and purchases in this market among the young people are growing. Among the potential buyers registered with second-hand housing agent Golden Keys in 2006, some 56 percent were aged between 25-35. That proportion was only 38 percent in 2004. More than 75 percent of the young second-hand home buyers need loans, making this a vast market.

"Although foreign banks had been absent in loans for second-hand homes, BEA and Standard Chartered launched foreign currency loans for these during a recent housing fair in Beijing," said Jin Yusong, Marketing Director of Homelink, a second-hand housing agent. "Moreover, the mature services provided by foreign banks will inevitably bring more choices to those applying for loans for second-hand homes."

According to Jin, the risks of providing loans for second-hand houses are lower than those for new homes and the returns are much higher. Yet Chinese banks, especially the four state-owned commercial banks, have been occupying the market. The share for foreign banks in this market is nearly zero.

However, Li Lulu, Deputy Manager of the Financial Department of Century 21 China Real Estate that has long cooperated with BEA and HSBC, is confident about the future of foreign banking development in this market. In the new housing market, she said, foreign banks have been cooperating with developers for high-end properties and can only provide loans for foreigners. After China opens the renminbi business to all, foreign banks will cooperate with housing agents for loans on second-hand homes-a mature market they are experienced with in their own countries. "They intend to develop this business and are quite active," Li added.

"BEA will pay attention to loans both for new and second-hand homes," said Chu Xiaolu, Deputy Director of BEA Beijing Branch, confirming Li's opinion. "Although 90 percent of our loans are granted for new homes now, we will also attach importance to loans in the second-hand housing market."

Though foreign banks have made preparations to enter this market, Kang Sheng contends that their influence on the second-hand home market will be limited. In his opinion, foreign banks may provide prospective second-hand home buyers with extra funds, indirectly making the market more active, but not enlarging its size.

Foreign banks are still not aggressive in the personal housing loan market, especially when targeting Chinese buyers. Several housing projects whose customers are mainly Chinese confirm that they haven't conducted housing loan business with foreign banks. Because many Chinese house buyers are used to Chinese banks, there is no need for the developers to establish cooperation with foreign banks. Similar cases can also be found in the second-hand housing loan market.