- Cancellation of Property Mortgage Interest Rate Floor
- Public Housing Fund (Prudential Loan) Interest Rate Will Be Reduced by 0.25% Starting Tomorrow
- First-Time Homebuyers Down Payment Ratio Reduced to 15%
- 300 Billion Yuan in Guaranteed Affordable Housing Repurchase Loans
Cancellation of National-Level First and Second-Tier Commercial Personal Housing Loan Interest Rate Policy Lower Bounds
The Shanghai Headquarters of the People’s Bank of China, branches of the People’s Bank of China in provinces, autonomous regions, municipalities directly under the central government, and planned cities; branches of all state-owned commercial banks, Postal Savings Bank of China, and all joint-stock commercial banks:
In order to implement the decision deployment of the Central Committee of the Communist Party of China and the State Council, adapt to the new supply and demand relationship in China’s real estate market and the new expectations of people for high-quality housing, and promote the stable and healthy development of the real estate market, the following matters regarding adjustments to commercial personal housing loan interest rate policies are hereby notified:
I. The lower bounds of interest rates on commercial personal housing loans for first-tier and second-tier housing nationwide are cancelled.
II. Branches of the People’s Bank of China at provincial levels will, in accordance with the principle of tailoring measures to local conditions, guide provincial market interest rate pricing self-regulatory mechanisms to determine independently whether to set lower bounds on commercial personal housing loan interest rates and their respective levels (if any), based on the real estate market situation within each jurisdiction and local government regulatory requirements.
III. Financial institutions in the banking industry shall reasonably determine the specific interest rate level for each loan, taking into account the interest rate limits determined by provincial market interest rate pricing self-regulatory mechanisms (if any) and factors such as the operating conditions of the institution and its customer risk profile.
Reducing Personal Housing Mortgage Loan Interest Rates by 0.25 Percentage Points
The People’s Bank of China, Shanghai Headquarters, branches of the People’s Bank of China in provinces, autonomous regions, municipalities directly under the central government, and planned special-purpose cities; policy banks, state commercial banks, Postal Savings Bank of China, and joint-stock commercial banks:
The People’s Bank of China has decided to reduce personal housing mortgage loan interest rates by 0.25 percentage points, effective May 18, 2024. The interest rates for first-time and second-home personal housing mortgage loans with a term of less than 5 years (including 5 years) will be adjusted to 2.35% and 2.85%, respectively. The interest rates for first-time and second-home personal housing mortgage loans with a term of less than 5 years (including 5 years) will also be no lower than 2.775% and 3.325%, respectively.
Down Payment Ratio Adjusted to No Less Than 15%
The People’s Bank of China, Shanghai Headquarters, branches of the People’s Bank of China in provinces, autonomous regions, municipalities directly under the central government, and planned unitary cities; the Regulatory Bureau of the National Financial Supervision and Administration; all state-owned commercial banks, Postal Savings Bank of China, and all joint-stock commercial banks:
In order to implement the decision-making deployment of the Central Committee of the Communist Party of China and the State Council, adapt to the new supply and demand relationship in China’s real estate market and the new expectations of people for high-quality housing, and promote the stable and healthy development of the real estate market, the following matters regarding personal mortgage loans are hereby notified:
For residential households purchasing commercial first-time home purchases, the minimum down payment ratio for commercial personal mortgages on first-time home purchases will be adjusted to no less than 15%, and the minimum down payment ratio for commercial personal mortgages on second-time home purchases will be adjusted to no less than 25%.
Based on this, the branches of the People’s Bank of China at each provincial level, and the派出机构 (outposts) of the National Financial Supervision and Administration will, according to the control requirements of local governments, independently determine the minimum down payment ratio limits for first-time and second-time home purchases in various cities based on a principle of tailoring policies to local conditions.
The Central Bank Will Establish a 30 Billion Yuan Guarantee Housing Re-Loan
At 4:00 PM, representatives from the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, the People’s Bank of China, and the National Financial Supervision and Administration Commission gathered at a routine policy briefing by the State Council to introduce measures to effectively ensure contract fulfillment (保交房).
At the meeting, People’s Bank of China Vice Governor Tao Ling announced that the central bank will establish a 30 billion yuan guarantee housing re-loan facility to support local state-owned enterprises in purchasing completed but unsold commercial properties at reasonable prices for use as self-built or rental-based affordable housing. This is expected to drive an additional 50 billion yuan in bank loans.
According to the People’s Bank of China, the guarantee housing re-loan term can be extended up to four times annually, with a rate of 1.75%, aimed at 21 nationwide banks. It incentivizes banks to lend to local state-owned enterprises selected by city governments to purchase completed but unsold commercial properties for use as affordable housing. The purchased properties are strictly limited to those commercially available properties built by real estate developers that have not yet been sold.
Regarding this policy, the central bank will soon issue the Notice on Measures Concerning the Establishment of the Guarantee Housing Re-Loan Facility.