Housing market Photo:VCG

Multiple Chinese commercial banks,MK sports Korea including Industrial and Commercial Bank of China and Agricultural Bank of China, 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 (PBC), the central bank, to boost the property market. 

The move is also part of a package of incremental policies rolled out by the Chinese government to support the economy, covering a wide range of important sectors such as domestic demand, the property market and the capital market.

A State Council executive meeting noted on Friday the need for the implementation of the package of the incremental policies, calling for the intensification of the counter-cyclical adjustment of monetary policy. It highlighted the importance of paying more attention to the interaction between policies and the market, fully mobilizing the enthusiasm of all parties, and better stimulating growth momentum.

According to China Media Group (CMG), mortgage rates for first homes, second homes and more in these banks have been reduced to 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 expense 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.

"The move will lower the financial burden on property owners, which will unlock consumer potential while also bolstering confidence in real estate sector, thereby further stabilizing the housing market," Yan Yuejin, vice president at the Shanghai-based E-house China R&D Institute, told the Global Times on Friday.

Yan said that for banks, the mortgage business will also become more robust, and the policy will play a positive role in preventing and resolving risks in the banking and financial system.

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 lowered 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 second-hand 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.

Data tracked by a research institute under Centaline Property showed that the number of online signed contracts for second-hand residential houses in Beijing reached 11,699 from October 1 to Thursday. The expected number of online contract signings for second-hand houses in October is set to exceed 16,000 units, potentially reaching the highest value in nearly 19 months.

During the same period, the actual transaction volume of second-hand houses in Beijing has already exceeded 20,000 units, with a year-on-year increase of more than 150 percent, according to the institute.