Saddled with a slumping property market, China is extending measures introduced in September that allow lower mortgage rates for first-home buyers if newly constructed house prices drop for three consecutive months.
(Bloomberg) — Saddled with a slumping property market, China is extending measures introduced in September that allow lower mortgage rates for first-home buyers if newly constructed house prices drop for three consecutive months.
Cities are eligible to maintain, lower or remove minimum interest rates on loans for first home purchases, according to a statement from the central bank and banking regulator Thursday evening. The measures will “form a long-term mechanism to support a stable and healthy property market,” they said.
Local authorities should evaluate house prices every three months, with December 2022 as the starting point. Prices need to drop both month-on-month and year-on-year for cities to qualify for easing, according to the statement.
If a city’s home prices increase for three consecutive months, local governments should re-adopt the national minimum interest rates on first-home loans. Existing rules for second-home mortgage loans are unchanged.
China introduced the easing of mortgage rates in late September, with the aim of being in effect until the end of 2022, after the country’s housing market was battered by Covid and restrictions on corporate borrowing.
China’s home sales continued to slump in December, with the 100 biggest developers seeing new sales dropping 30.8% from a year earlier. Investors are betting on further stimulus on the demand side to reverse the downturn.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.