The People’s Bank of China has recently implemented a series of measures aimed at adjusting loan policies for the real estate market. These actions are designed to promote the stable and healthy development of the market. Below is a summary of these significant policy adjustments:
1. Reduction on Minimum Down Payment Ratio
- First Home: The minimum down payment ratio has been reduced from 20% to 15%.
- Second Home: The minimum down payment ratio has been lowered from 30% to 25%.
Experts consider this adjustment as the most lenient down payment policy in history, expected to significantly stimulate real estate market transactions.
2. Housing Provident Fund Loan Rate Reduction
Effective from May 18, 2024:
- First Home Loan Rates: Reduced to 2.35% for loans up to 5 years and 2.85% for loans over 5 years.
- Second Home Loan Rates: Minimum rates set at 2.775% for up to 5 years and 3.325% for over 5 years.
3. Commercial Loan Rate Policy Adjustment
The national lower limit on commercial personal housing loan rates for both first and second homes has been removed. Provincial branches will now independently decide whether to set lower limits on interest rates based on local market conditions and government control requirements.
4. Market Impact
These policy adjustments are considered major benefits for the real estate market. They are expected to:
- Boost buyer confidence
- Improve the financial situation of real estate companies
- Positively impact real estate stocks
5. Bank Asset Yield
Despite the central bank removing the lower limit on interest rates, the potential for banks to reduce commercial loan rates is limited. This is because the yield on bank assets has already been under pressure in the first quarter of 2024.
6. Local Policy Autonomy
Provincial branches and financial regulatory bodies will determine the lower limits on loan rates and down payment ratios based on the principle of tailoring policies to local conditions. This adds flexibility to the policies.
These policy adjustments reflect the Chinese government’s active support for the real estate market. By reducing the financial burden on home buyers and stimulating market demand, these measures aim to maintain market stability and encourage growth in the real estate sector.