Housing market Photo:VCG

Multiple Chinese commercial banks, including Industrial and Commercial Bank of China and Agricultural Bank of China, have cut their mortgage rates on existing home loans on Friday, as part of the implementation of a package of policies proposed in September by the People's Bank of China, the central bank, to boost the property market.

According to China Media Group (CMG), mortgage rates for first homes, second homes and more in these banks have been reduced no lower than 30 basis points (BP) below the loan prime rate (LPR).

According to CMG, as part of a batch adjustment by banks, the reduction in mortgage rates does not require any action from borrowers. In Beijing, Shanghai, and Shenzhen, mortgage rates for second and more homes can only be adjusted to the local policy rate floor; in other regions, mortgage rates will be adjusted to LPR-30BP.

Many banks said that the adjustment of the mortgage rates for existing housing loan in most regions of the country can be completed on Friday. After the adjustment, the borrowers will be notified of the results through text messages and other means, according to CMG.

After the adjustment, the average reduction in mortgage rates for existing home loans will be around 0.5 percentage points. The move is expected to benefit 50 million households, or a population of 150 million, and reduce the total interest expenses for households by approximately 150 billion yuan ($21.05 billion) per year on average, which will help boost consumption and investment, Pan Gongsheng, governor of the PBC, said on September 24.

In a bid to prop up the housing market, the central bank in late September ordered cuts in mortgage rates for existing loans, as well as lowering down payment ratios and relaxed purchase restrictions.

Since the release of the relevant policies, declines in major indicators such as investment in real estate development and sales of newly built commercial properties continued to narrow. In particular, since the end of September, there has been a marked increase in the number of viewings, visits and signing of contracts for new properties, and the volume of transactions for secondhand properties continued to rise, resulting in positive changes in the market, Ni Hong, minister of housing and urban-rural development, told a press conference on October 17.

China's real estate market is rebounding after three years of adjustments driven by various policies, and figures for October are expected to reflect a positive and optimistic trend, Ni noted.

In Shenzhen, South China's Guangdong Province, the market for new apartments is booming, with the total number of subscriptions for such homes reaching 8,405 units between the start of October and Tuesday, the same level as during boom periods, according to a post on the official WeChat account of the Shenzhen Municipal Government on Wednesday.

Global Times