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CHINA REDUCES EXISTING MORTGAGE RATES BY -OCTOBER IN WIDE-SMALL POLICIES FOR WEAKENED PROPERTY MARKET
In a move med at supporting the beleaguered property market and mitigating economic slowdown, China's central bank announced on September 29 that banks would be instructed to lower mortgage rates for existing homeowners by the of October. The reduction targets are set at no less than 30 basis points bps below the loan prime rate benchmark, a step part of sweeping measures to strengthen the property sector.
The anticipated average rate cut is expected to amount to about 50 bps. This comes amidst an ongoing series of policy interventions including reduced down payment ratios and mortgage rates designed to bolster China's struggling property market since earlier this year.
Despite these efforts, stimulus measures have struggled to drive sales or enhance liquidity, with the market remning a significant drag on overall economic growth.
In Guangzhou city, restrictions on home purchases were lifted on September 29. Simultaneously, Shangh and Shenzhen announced plans to ease purchase restrictions for non-local buyers and lower the minimum down payment ratio for first-time homebuyers to no less than 15.
This announcement comes after China's largest stimulus package since the COVID-19 pandemic was unveiled on September 24 with revive economic growth.
New home price declines reached their fastest pace in over nine years during August, and property sales have fallen by 18 year-to-date through the first eight months of this year according to preliminary data.
The initiative to reduce mortgage rates targets homeowners with higher-rate loans to ease their financial burden, seeking to stimulate the property market and boost weak domestic consumption demand.
Critically, as market-oriented reforms on interest rates continue to gn momentum and there is a significant shift in both supply-demand dynamics within the real estate sector, the current mortgage rate pricing mechanism has revealed some inherent shortcomings, stated the People's Bank of China PBOC in its official statement.
It becomes imperative for urgent adjustments and optimization given the strong public response, added the PBOC.
China’s four largest state-owned banks, including Industrial Commercial Bank of China and China Construction Bank, are poised to actively respond to this policy, promoting a smooth adjustment of existing mortgage interest rates. Most local governments have already lifted property purchase restrictions except for a few cities like Xiamen and Suzhou.
With this move, the m is to encourage the property market to recover gradually. The measures also reflect China's commitment to mntning stability in housing markets and supporting economic growth amid global uncertnties.
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Guangzhou China reduces mortgage rates by end of October Supporting weakened property market policies Banks instructed to lower home loan rates 50 bps average rate cut expected Stimulus measures for Chinas housing sector Shanghai ease property purchase restrictions