China’s top financial regulators on Thursday issued a notice to lower down payments for both first- and second-time homebuyers, while further cutting interest rates on existing mortgages, aiming to better meet housing demand and promote the healthy and steady development of the real estate market.
According to the notice issued by the People’s Bank of China (PBC), the central bank, and the National Administration of Financial Regulation (NAFR), the lowest down payment for first-time home purchasers will be 20 percent, while it will be 30 percent for second-time buyers.
The lowest mortgage interest rate limit for second-time homebuyers should be no less than 20 basis points (bps) over the loan prime rate (LPR) during the period, and the rate for first-time buyers should be no less than the level of 20 bps over the LPR, read the notice.
The optimization aims to fit the major changes in supply and demand in China’s housing market, while better meeting inelastic housing demand and promoting the stable, healthy development of the real estate market, read the notice. It stressed that the country is sticking to the position that houses are for living in, not for speculation.
On the same day, the central bank and the NAFR also said to lower interest rates on existing first-home loans.
Experts expect the move to further revive the housing market and support its further sustainable development.
The targeted aspects of down payments and loan interest rates are the most important to consumers, and the adjustments were made to further cater to market demand, Song Ding, a research fellow at the China Development Institute, told the Global Times on Thursday, expecting the market to have a noticeable response, especially during the upcoming consumption peak in September and October.
The notice clarified that the lowest down payment ratios for first- and second-time homebuyers, which can better guide local authorities with policy making while urging them to follow the move and cut the down payment to the lowest, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Thursday.
Yan said that the policy will have a positive impact on China’s housing demand while further boosting demand for reasonable housing consumption.
As for the adjustment to interest rates on existing mortgages, Yan added that the policy also stepped up support for purchasing second homes, as the previous support measures focused more on first-time purchases.
Song said that the implementation of the new policy might be a turning point for China’s real estate market, allowing it to gradually shift back to a virtuous cycle with more sustainable development.
Chinese authorities have been rolling out measures to boost the housing sector. On Friday, two government agencies and the PBC issued detailed rules, which proposed that local governments can adjust mortgage lending-related policies and measures regarding the identification of first-home buyers.
A household whose family members do not own a property at a certain locality is eligible for the credit policy for first-time buyers, regardless of whether it has previously applied for a housing loan.
(Global Times)
