Mortgage rates cut in several Chinese cities

Mortgage rates have been cut in several Chinese cities in an effort to safeguard the healthy development of the real estate market and protect homebuyers’ lawful rights. Some commercial banks in Guangdong province’s Guangzhou and Foshan initiated the cuts in mortgage rates and sped up the processing of first time loan applications. The People’s Bank of China (PBOC) issued a statement on the real estate market after a quarterly meeting of its Monetary Policy Committee on September 27. Experts said the central bank’s comments on the property market were intended to enhance market confidence and stabilize overall market prospects. “Entering the fourth quarter, in order to accelerate capital recovery, property developers are stepping up efforts to increase sales, in contrast to the passive sentiment of home buyers amid sizable market adjustment,” said Cao Jingjing, Research Director with the China Index Academy.

To realize the healthy development of the property market, the central government has sent signals on maintaining stabilization, and the effect of policies will depend on measures taken by local governments and financial institutions, including financial support for property developers in a stable condition, added Cao. “After all, the fundamental settlement of the property market is a long-term task, which cannot be achieved in the short term. Maintaining market stability requires support for rational demand,” said Li Yujia, Chief Analyst at the Guangdong Provincial Residential Policy Research Center. According to Li, the central bank’s comments suggested that the most stringent mortgage measures related to home purchases have come to an end, and rational demand in the home market would be protected with more fine-tuning in terms of related financial policies. “Some financial policies have impacted the reasonable demand of homebuyers, caused a slump in home transactions and led to a drop in the price of second-hand properties. The market may experience violent price fluctuations, going against the nation’s aim of stabilization and the goal of achieving common prosperity.” Property loans can be a very important financial tool for wealth redistribution, said Zhou Xiaochuan, former Governor of the People’s Bank of China (PBOC), while attending a chief economists forum at Fudan University on September 25.

Yan Yuejin, Director of the Shanghai-based E-house China Research and Development Institution, said the lawful rights of property purchasers include the smooth completion of regular credit approval procedures after signing home purchase contracts, as well as the handover of properties to purchasers in due time. While maintaining the healthy and stable development of the property market, protecting home purchasers’ interests should also be regarded as the foremost task, so the central bank’s statement shows the government’s resolve in protecting homebuyers, said Chen Jie, Professor specializing in property research at Shanghai Jiao Tong University, the China Daily reports.