China sets up mortgage rate adjustment mechanism for some home buyers, real estate news, ET Real Estate

Beijing: ChinaIn a move to further support the property sector, the central bank on Thursday said the central bank and the banking and insurance regulator have set up a dynamic adjustment mechanism on mortgage rates for first-time home buyers.

In cities where sales prices for new homes have fallen for three consecutive months month-on-month and year-on-year, mortgage rate caps for first-time home buyers could be phased out or eliminated. People’s Bank of China (PBOC).

In late September, the central bank allowed localities to take similar action until the end of 2022.

The move is more flexible than the September policy, said Chen Wenjing, analyst at China Index Academy, one of China’s largest real estate research firms. Will help provide better support.”

The crisis in China’s property market, once a pillar of the world’s second-largest economy, worsened last summer with home prices, sales and investment falling sharply.

In recent weeks, policymakers have extended support to the industry to address the long-standing liquidity crunch that has hit developers and delayed the completion of several housing projects, scaring away buyers.

By analysts’ count, 38 cities are eligible for the adjustable mortgage rate floor, including some Tier II cities. Wuhan And settlement private loans and over 20 smaller cities.

Analysts said the move reflects the government’s growing intent to support demand in vulnerable cities, but the impact may be limited.

“Lowering mortgage rates haven’t deterred sales. We think homebuyer confidence is a more important factor than affordability,” analysts at JP Morgan said in a research note.

Ni Hong, the head of China’s housing regulator, vowed to provide stronger support for first-time home buyers by allowing lower down payments and cutting mortgage interest rates, according to state broadcaster CCTV.

Nee said “reasonable” support should be given to buyers of second homes, although not for the purchase of three or more homes, and he was confident the property market would stabilize and recover in 2023.