This aerial photo taken on July 4, 2023 shows the construction site of a residential housing project in the start-up area in Xiong'an New Area, north China's Hebei Province. (Xinhua/Xing Guangli)
BEIJING, Sept. 8 (Xinhua) -- China's four state-owned commercial banks announced Thursday that they will cut interest rates on existing mortgages for first-home loans.
The adjusted interest rates will be effective from Sept. 25, the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank said in statements.
The move follows a decision by China's financial watchdogs last week to optimize housing credit policies, in a bid to reduce interest expenses for mortgage borrowers and help spur consumption and investment.
According to analysts, this lowering of mortgage rates will benefit about 40 million borrowers. As of June end, China's outstanding individual home loans stood at 38.6 trillion yuan.
Apart from rate cuts, mortgage rules have also been eased for home-buyers as the country moves to better meet housing demand and promote the sound development of the property sector.
In late August, the Ministry of Housing and Urban-Rural Development proposed a policy option for local governments, according to which a household whose family members do not own a house in a certain locality could be deemed first-home buyers when applying for a mortgage loan from a bank.
Previously, a home buyer would have been seen as a second-home buyer if he/she had a record of mortgage loan usage or house ownership. The down-payment ratios and lending rates for second-home buyers are higher than for first-home buyers.
The criteria adjustment was adopted by many cities in the following week, including the four first-tier ones -- Beijing, Shanghai, Guangzhou and Shenzhen -- where policy support has started to result in brisker trading.
In Shanghai, which announced the policy shift last Friday, the number of visitors and transactions both increased significantly at some new residential housing properties.
Lower down-payment requirements have prompted transactions, according to Guan Chong, regional general manager for east China at China Jinmao. One of his company's properties saw an expansion in daily visitor and transaction volume of 150 to 200 percent over the weekend.
Those seeking to improve their housing conditions are also putting their properties on sale so that they can enjoy the relaxed mortgage policies as first-home buyers when purchasing a new home.
More than 4,000 and 3,000 second-hand homes have been listed on the markets of Beijing and Shanghai, respectively, since the mortgage rules were adjusted, market data shows.
Song Hongwei, research director with real estate consultant firm Tospur, said the first-tier cities will be the first to be affected by the policy adjustment and see a rise in the transactions of selling current homes and buying new ones.
The market trend will gradually pass on to smaller cities, which will also witness more active housing transactions, according to Song.
A single purchase
