MNI BRIEF: PBOC Lowers Mortgage Rate and Down-Payment Ratio
The People’s Bank of China will lower rates of existing mortgages by 50 basis points on average and reduce the down-payment ratio for second-home buyers to 15% to support the real-estate market and boost consumption, and investment, Governor Pan Gongsheng told reporters on Tuesday.
Lenders will be guided to reduce interest rates on existing mortgages to levels close to those of newly issued loans, with the average expected reduction being around 50bp, Pan said, estimating the move would benefit 50 million households covering about 150 million people, and reduce annual household interest expenses by about CNY150 billion .
The minimum down-payment ratio for first and second homes will be unified, with the national minimum down payment for second homes lowered to 15% from 25%, which will benefit consumption and investment, he noted.
The central bank will optimise the policy for relending on affordable housing, increasing the proportion of central bank funding support for the previously established CNY300 billion affordable housing relending program from 60% to 100% to enhance incentives for banks and purchasing entities.