New Mortgage Policies to Benefit Homebuyers
A building site in Taiyuan, Shanxi province. (Photo by WU JUNJIE/CHINA NEWS SERVICE)
The differentiated home loan policies announced by the state financial authorities on Sunday will not only reduce the monthly repayment amount for homebuyers, but send a positive signal that the government is fully supportive of stable and healthy development. housing market, analysts said Monday.
In a joint statement on Sunday, the People’s Bank of China, the central bank and the China Banking and Insurance Regulatory Commission said that based on the corresponding tenor of the loan benchmark prime rates or LPRs, buyers of a first home can receive interest rates on home loans. which are 20 basis points below the lower limit for commercial banks. Interest rates for second home purchases will remain unchanged.
The move aims to support firm and rational housing demand and promote the stable and healthy development of the real estate market, the statement said.
To uphold the principle that “housing is for living in, not for speculation” and fully establish a long-term mechanism for the smooth operation of the real estate sector, cities will adopt measures in accordance with the special conditions of their real estate sector. locally, he explained.
Industry experts have welcomed the changes. “Differentiated housing lending policies will help build industry confidence. They are in line with the spirit of announcements made at recent meetings of the Political Bureau of the Communist Party of China Central Committee,” said Ding Zuyu, CEO of E-House (China) Enterprise Holdings Ltd.
During its December meetings, the Political Bureau indicated that support will be given to the real estate sector to better meet the reasonable demand for housing from buyers. For the first time, the meeting announced the goal of promoting the healthy development of the real estate industry and forming a virtuous cycle of the industry. On April 29, the Politburo reiterated that efforts should be made to improve housing policies based on local factors and to respond to strong buyer demand for better housing.
In April, the PBOC announced that it would keep the one-year prime lending rate unchanged at 3.7% and the five-year LPR, on which many lenders base their mortgage rates, also unchanged at 4.6%.
Since the beginning of this year, real estate policies have been optimized more than 200 times in more than 100 Chinese cities. The trend had become very pronounced in April, according to data from the China Index Academy.
Following nationwide home loan interest rate adjustments, more local governments are expected to come up with new measures to reduce the cost of rationally buying a home, create better conditions to stimulate market transactions and stimulate a reasonable request, said Chen Wenjing, deputy director of research at China Index Academy.
Industry experts have suggested that to maintain stable economic growth, the real estate market, which is considered one of the economic pillars, is likely to see more positive measures for its rational development.
Investment in property development in China edged down 2.7 percent year-on-year to 3.9 trillion yuan ($574 billion) in the first four months. Investment in residential buildings fell 2.1 percent year on year to about 2.95 trillion yuan, according to data from the National Bureau of Statistics.