The recent mortgage reforms in China aim to meet growing housing demands and promote the property sector.
Under the newly announced measures, deposit requirements for first-time buyers will be lowered, and existing mortgage interest rates for first-time homeowners will also be reduced.
Both have been deemed significant actions to stabilize the country’s housing market.
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China mortgage reforms
The recent mortgage reforms in China aim to meet growing housing demands and promote the property sector.
Deposit requirements for first-time buyers will be lowered, and existing mortgage interest rates for first-time homeowners will also be reduced thanks to newly announced measures.
Both are significant actions to stabilise the country’s housing market.
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CGTN reporter Ehrard Vermaak visited a real estate sales office in Beijing on Sunday. Vermaak reports the office was crowded with customers, eager to take advantage of the new measures.
China’s latest reforms relating to lower mortgage rates and down payments have stimulated the demand for housing.
“There is a significant increase in transactions. Our weekly average property sales before the new policy was about 15; now, it has been close to 60 this week,” said sales director Qin Pengfei.
Nationwide minimum deposit now:
- 20% for first-time buyers
- 30% for second-time buyers
Before: 40% in many cities
Home transactions on the rise
A survey by real estate research firm China Index Academy showed home transactions in Beijing rose by almost 17%, in terms of area sold, in the week beginning September 4th.
Regarding the new policy, the People’s Bank of China said the nationwide minimum downpayment would be 20% for first-time buyers and 30% for second-time buyers.
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Before the announcement, many cities adopted a 40% deposit requirement.
“Before the new policy, the pressure of a large downpayment was a little too much for me, and then the new policy came. I rushed over here to see what rates were available,” said a Beijing resident.
According to the Central Bank, from September 25th, homeowners were free to negotiate with lenders to reduce the interest on outstanding mortgages, either by changing their contracts or switching mortgage providers.
Beijing and other major cities have said they will allow people who have fully repaid their previous mortgage or sold their other homes to make down payments of as little as 35 to 40 %… compared with 60 to 70 % previously.
In Shanghai, after the new policy, buyers rushed to real estate agencies to look for their dream homes… leading to 70 % increase in real estate sales compared to previous weeks.
“The new policy will reduce the pressure of a large down payment, so today we will look at larger houses,” said Ms Laing, a Shangai resident.
According to the People’s Bank of China, this new policy will help reduce interest costs for homebuyers, boost consumption and stimulate investment.
*CGTN is a BGTN content partner.
*This report was filed by Ehrard Vermaak.
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