China’s Top Cities to Lower Mortgage Rate after Housing Minister Urges to Further Boost Property Market

BEIJING, July 28 (TiPost)— China’s major cities will see mortgage rates lowered soon as a response to latest calling of the top housing official, underscoring Beijing’s determination to boost the property market with great efforts.

Credit：Visual China

It is required to continue cement the steady recovery trend of the property market, said Ni Hong, head of the Ministry of Housing and Urban-Rural Development (MHURD), at a recent symposium with leaders of state-owned and private enterprises from the real estate and related sectors, Xinhua News Agency reported. Ni stressed the significance of meeting residents’ essential housing demand and their needs for better living conditions, called for fully implementing favorable measures, such as lowering down payment ratios and mortgage rates for first-time home buyers, tax incentives for home upgrades, treating homebuyers who had paid off previous mortgages to be first-time purchasers. The minister also asked property developers to ensure the delivery of presold homes and accelerate home construction and project delivery.

The ministry has said stability of the construction and property sectors plays a critical role in promoting a broader economic recovery, according to the report. The ministry vowed to get the construction sector on an industrialized, digital and green track to promote its sustainable and healthy development, and give full play to the sector’s positive role in simulating investments, stabilizing growth and employment support.

This is the housing ministry’s latest response to a meeting of the Communist Party’s Politburo held on Monday. The Politburo’s July meeting tends to set the tone for China’s economic policies for the second half of the year. Chinese policymakers at the meeting promised to adapt to major changes in the demand-supply dynamics in the property market, adjust and optimize policies in a timely manner, adopt city-specific measures to better make use of policy toolkit and meet residents’ essential dwelling demand and their needs for better housing, and facilitate a steady and healthy growth of the property market.

Home buyers in many Chinese cities still have to afford more than 20% of minimum down payment ratio and the mortgage rates over 4%, so it is expected to witness a wave of cuts in down payment ratios and mortgage rates for first-time home buyers in the first half of August following the housing minister’s request, for Yan Yuejin, research director of the Shanghai-based E-house China Research and Development Institute. The institute estimated the average down payment ratio for the first home buyer in 20 key cities across the country is 24%, and banks in Beijing and Shanghai require the highest ratio. Buyers in the top two cities are offered 40% and 35% of down payment ratio respectively.

The significant new policy trend the housing minister proposed is that buyers with mortgage history are allowed to be considered as the first home buyer as long as they pay off previous mortgage, Yan Yuejin said. The expert expected such stimulus will have the greatest impact on first-tier cities like Beijing and Shanghai.

At present, lenders in four first-tier cities and some second-tier cities such as Chengdu mainly no longer consider borrowers as first-time home buyers once their names are on the mortgage, no matter whether they have paid off their mortgage, Beijing China Index Academy noted. The independent real estate research institute suggested the government adjustment or optimization of the housing and mortgage policy to activate house trading in key cities since the existing policy dampens people’s interest for home upgrades.

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