real estate Photo:Xinhua

Several Chinese cities have cut down payment ratios and lowered mortgage rates for homebuyers following the nation's sweeping measures in the real estate sector to boost sales and reduce housing inventories. 

Observers said that these active measures implemented by local governments show that there's still scope for lower down payment ratios and mortgage rates, and these moves will further activate housing transactions nationwide in the second quarter.

On Wednesday, several government departments of Central China's Hubei Province, including the Department of Housing and Urban-Rural Development, vowed to shore up the stable and healthy development of the real estate market. The announced measures include easing house purchasing limits and adding financial support to the local real estate market, according to a notice on the official WeChat account of the Department of Housing and Urban-Rural Development of Hubei.

The minimum down payment for first-time buyers will be no less than 15 percent, compared with no less than 20 percent previously. For second-time buyers, the figure was adjusted to no less than 25 percent from 30 percent previously.

The interest rate floor for personal housing loans was canceled.

The interest rates for individual housing provident fund loans were reduced by 0.25 percentage points. For first-time borrowers with a loan term of five years or shorter, the rate is now 2.35 percent, and for those with a term of over five years, the rate is now 2.85 percent.

For second-time borrowers with a term of five years or shorter, the rate is now 2.775 percent, while for those with a term of over five years, the rate is now 3.325 percent.

All 17 cities and prefectures in Hubei have lowered the interest rates for individual housing provident fund loans, the notice said on Wednesday.

On May 17, the People's Bank of China, the central bank, the National Financial Regulatory Administration and other government departments announced "ground-shaking" policies for the real estate sector, relaxing down payments and cutting housing loan interest rates.

Following the announcement, the real estate market had a busy moment with consultations at some places doubling and a significant increase in transaction volumes.

Other major cities including Xi'an in Northwest China's Shaanxi Province and Hefei in East China's Anhui Province applied the adjusted down payment ratios.

Guiyang in Southwest China's Guizhou Province and Lhasa in Southwest China's Xizang Autonomous Region announced plans to follow the provident fund loan interest rate cut policy.

Last week, the nation's four first-tier cities - Beijing, Shanghai, and South China's Guangzhou and Shenzhen - implemented lower interest rates for housing provident fund loans.

These moves came after a meeting of the Political Bureau of the Communist Party of China Central Committee held on April 30, which demanded research on policies to reduce housing inventories and improve the quality of new housing, among other listed economic work priorities.

Current housing policies have reached a fairly relaxed level, and will have a positive impact on home sales and the loan market, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times. More cities will follow the new policies, Yan said.

Following the sweeping policies, China kept its benchmark lending rates unchanged on Monday. The one-year loan prime rate (LPR) was kept at 3.45 percent, while the five-year LPR was unchanged at 3.95 percent, China's central bank announced.

As the economy remains on a steady recovery track, the urgency of further loosening fiscal policy is reduced, analysts said.

Lower financing costs for home purchases, amid a relatively stable macro interest rate environment, underscore policymakers' resolve and determination to actively bolster the property market.