Beijing cuts mortgage rates for first-time homebuyers to revive property market

Sunday’s announcement shows Beijing’s commitment to reversing the recent slump in China’s property market, analyst says

Regulators reiterate Xi comment that ‘houses are for living in, not for speculation’

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A residential apartment block in Beijing. Sunday’s announcement comes amid expectations that China’s gloomy housing market might continue to struggle despite the introduction of price cuts by developers and easing measures by regulators in Beijing. Photo: Bloomberg

Published: 5:05pm, 15 May 2022

In an effort to revive the country’s property market, Beijing will let banks cut the lower limits of interest rates for first-time homebuyers by 20 basis points, Chinese regulators said on Sunday.

The People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC), two of the country’s top financial regulators, said in a notice that they will make adjustments to China’s differential housing credit policies.

For households that have borrowed to purchase their first homes, the lower limit of the mortgage rate will be reduced to 20 basis points below the corresponding loan prime rate, the notice said. The minimum mortgage rates for purchases of second homes will remain unchanged.

Sunday’s announcement shows Beijing’s commitment to reversing the recent slump in China’s property market, said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute.

“Combined with policies such as lowered down payments, lowered mortgage interest rates, loosened restrictions on second-hand housing sales … [the new adjustments] will create better conditions for a more active market in mid-to-late May and even later,” he said. The new minimum mortgage rate will guide local governments and banking institutions on their loan policies, encourage real estate developers to actively sell their projects and further reduce homebuyers’ costs, he added.

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