MNI China Press Digest Jan 6:  PBOC, Housing, LPR

Highlights from Chinese press reports on Friday:

• The People's Bank of China will give local authorities the power to independently adjust the lower mortgage rate limit for first time buyers in cities where the sales price of new builds has decreased for three consecutive months, according to Yicai.com. The paper said the move gives local policymakers flexibility to adjust rates that suit local conditions, which will help boost demand. The new mechanism would be applicable to 39 cities given current market conditions. The new measures follow a similar move in September last year that reduced lower mortgage rate limits in cities where sales price for new builds had fallen year-on-year between June and August 2022, the paper said.
• More policy support is needed to ensure people can buy and rent houses with confidence, according to Ni Hong, Minister of Housing and Urban-Rural Development. In a recent interview, the minister said down payment ratios could be reduced, and reasonable support should be given for purchasing a second home. Restrictions on third home purchases should be in place to discourage speculators. More support should be given for those trading in old for new builds and for family’s with many children. Ni’s comments were reported in the Securities Daily.
• A cut in loan prime rates (LPR) can be expected in 2023 as authorities try to boost the post-Covid zero economy, according to an editorial in the 21st Century Business Herald. The overall tone of monetary policy will remain “stable” , but an LPR cut would reduce the financing cost of the real economy, the paper said. Structural targeted lending will remain a pillar of “precise and powerful” policy, and the central bank will continue to implement its 16 point plan to support the real estate sector. Authorities will be keen for specific institutions to hand over profits to the Budget Stabilization and Adjustment Fund, thus expanding available funds at the treasury. Infrastructure investment will play an important stabilising role in the economy, and should be supported by appropriate credit funds, the paper said.