image credit: global times
Beijing, China’s capital, announced moves on Wednesday to decrease the cost of house ownership, including lowering mortgage interest rates and the minimum down payment ratio, in an effort to bolster the local property market.
The changes, revealed in a local government statement, came after the central bank published new recommendations for lowering minimum mortgage rates and down payments last month, prompting dozens of towns to modify property laws.
Beijing is cutting the minimum down payment ratio for house purchases from 30% to 20%, and for certain second home purchasers from 40% to 35%, according to the statement.
The city is also lowering the first-home mortgage floor rate to 45 basis points less than the loan prime rate (LPR). Previously, the floor was the LPR + ten basis points.
According to analyst Yan Yuejin of the E-House China Research and Development Institution, Beijing’s decisions indicate that China’s four largest cities have now simplified mortgage and other restrictions, which could help stimulate demand from house purchasers.
China’s deteriorating real estate sector has been a significant drag on the world’s second-largest economy.
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