by Xinhua Writer Wu Qiong
BEIJING, Sept. 30 (Xinhua) -- China's central bank and Ministry of Housing and Urban-Rural Development on Sunday rolled out a slew of policies to ease the financial burden born by property owners and bolster public confidence, in a bid to stabilize the real estate market.
According to the People's Bank of China (PBOC), the mortgage rates for first homes, second homes and more are to be reduced by no lower than 30 basis points below the loan prime rate (LPR) by Oct. 31, 2024.
So far, six major commercial banks, including the Industrial and Commercial Bank of China and the Bank of China, have acknowledged they are making plans on relevant adjustments and will release their plans before Oct. 12.
According to the central bank, the weighted average interest rate of existing mortgage loans was about 4.06 percent by the end of July. After the adjustments, the interest rate on existing housing loans will be decreased by about 0.5 percentage points to roughly 3.55 percent, calculated based on the latest reading of over-five-year LPR of 3.85 percent.
The new policy is expected to benefit 50 million households, equal to around 150 million people, and reduce the total interest expenses for households by approximately 150 billion yuan (about 21.41 billion U.S. dollars) per year on average, the PBOC said.
On Sunday, the central bank also announced that the minimum down payment ratio for individuals' commercial housing mortgages will be lowered to no less than 15 percent for both first- and second-home purchases.
The combination of policy stimuli is expected to stabilize expectations and bolster confidence in the property market, according to Yan Yuejin, deputy director at E-house China R&D Institute.
On the one hand, cutting interest rates on existing mortgage loans will ease financial burdens on property owners, he said, noting that the unification of minimum down payment ratios for first and second homes will make home purchases more affordable.
The array of stimulus measures came after a recent meeting of the Political Bureau of Communist Party of China Central Committee underlining efforts to reverse the downturn of and stabilize the real estate market.
The meeting stressed the need to respond to public concerns by adjusting policies restricting housing purchases and lowering interest rates on existing housing loans, among other favorable policies aimed at addressing the key issues in the country's real estate market.
On Sunday, China's Ministry of Housing and Urban-Rural Development said that it would support municipal governments, especially those in the first-tier cities, to leverage their decision-making powers to regulate the real estate market, and adjust policies restricting housing purchases based on local conditions.
Municipal governments responded quickly in implementing the fresh policies. In the city of Guangzhou, restrictions on housing purchases will be abolished, while local governments in Shanghai and Shenzhen also announced lowering the requirements for homebuyers to varying degrees.
The policy moves are conducive to promoting the stable and healthy development of the country's property market, Yan said.
China's property market has seen positive changes amid continuous policy support, said an official with the ministry of housing.
For instance, under the real estate financing coordination mechanisms established by the ministry and financial regulators, more financing support has been given to struggling developers so that they can complete ongoing projects and meet home delivery targets.
According to the ministry's data, commercial banks have approved more than 5,700 real estate projects on the "white list" that are eligible for financing support, with a loan value reaching 1.43 trillion yuan so far. The mechanisms have supported the on-time delivery of more than 4 million homes.
In the meantime, China's real estate development loans had achieved positive growth by the end of August, reversing a decline at the beginning of the year amid the government's increased financial efforts to support the property sector. ■