Analysts view this policy shift as part of a broader strategy to stabilize the real estate market and stimulate consumption, contributing to positive market sentiment.
The People's Bank of China (PBC) revealed a substantial cut in mortgage rates for existing home loans, with CCTV reporting an average reduction of about 0.5 percentage points. This adjustment aims to bring existing loan rates in line with the national average for new mortgages, thus reducing borrowers' interest burden. The PBC has set an Oct. 31 deadline for commercial banks to implement these changes for eligible mortgages.
In response to the central bank's directive, China's top four commercial banks confirmed they would modify interest rates on existing personal housing loans accordingly.
The PBC also announced that commercial personal housing loans will no longer distinguish between first and second-time home purchases, with a universal minimum down payment requirement of 15 percent.
Major cities like Shanghai, Guangzhou, and Shenzhen have followed suit with their own property policy relaxations. Shenzhen has lowered the minimum down payment for first-time homebuyers' commercial personal housing loans to 15 percent.
Shanghai has introduced seven new policies, effective October 1, 2024, which include easing restrictions for non-resident buyers and adjusting down payment requirements. For instance, Shanghai now requires a minimum 15 percent down payment for first homes and 25 percent for second homes.
These measures collectively represent a significant shift in China's approach to managing its real estate market, aiming to provide support and stimulate growth in this crucial sector.
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