Beijing, The People’s Bank of China (PBOC) on Sunday ordered commercial banks to begin lowering interest rates on all existing housing loans, in a sweeping move to help ease the mortgage burden on households hit by the slowdown. the economy.
All commercial entities will be required to reduce existing mortgage rates in batches by Oct. 31 to no less than 30 basis points below the PBOC’s prime lending rate, according to a statement from the central bank.
In the last year, China has implemented a series of real estate stimulus measures. Most local governments, except for some megacities such as Beijing and Shanghai, have eliminated minimum mortgage rates, but the measures have failed to boost sales or increase liquidity in a market that is shying away buyers.
Previous reductions in mortgage rates primarily benefited new buyers, leaving current homeowners with loans at higher rates. This caused households to rush to pay off existing mortgages early, further limiting household spending and consumption.
“As market-oriented interest rate reforms deepen and the relationship between supply and demand in the real estate market undergoes significant changes, the current pricing mechanism for mortgage rates has revealed some deficiencies,” the BPC said in its statement.
“Given the strong public reaction, the mechanism needs urgent adjustments and optimization,” he added.
The outstanding value of individual mortgages stood at 37.79 trillion yuan (5.39 trillion U.S. dollars) at the end of June, down 2.1 percent year on year, according to official data.
The widely expected decision to cut mortgage rates is intended to revive China’s crisis-hit property market and ease consumer caution that has brought the world’s second-largest economy to the brink of deflation.
The Chinese real estate sector, once one of the pillars of the economy, has lurched from one crisis to another since 2021, when regulatory measures against the high leverage of developers triggered a liquidity crisis.
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– 2024-10-01 02:06:33
