China’s Beijing and Shanghai on Friday (Sep 1) announced that they would allow homebuyers to enjoy preferential loans for first-home purchases regardless of their previous credit records.

That would make such buyers eligible for smaller down-payment thresholds and lower mortgage rates. 

The capital city of Beijing would implement the eased rules immediately, while the financial hub of Shanghai scheduled the change for Saturday, said local authorities of the two megacities, as China ramps up efforts to revive its crisis-hit property market.

That means all of China’s first-tier cities have broadened the definition of first-home mortgage.

The moves came days after the central government granted leeway for local officials to execute such policies, in a bid to revive demand from homebuyers that was shattered by the two-year property crisis.

Guangzhou and Shenzhen took similar steps, and down payments were cut across the nation that exceeded expectations. 

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“The recent easing since last week has exceeded expectations,” Betty Wang, senior economist at Australia & New Zealand Banking Group, said before the announcements in Shanghai. 

China’s home sales are slumping, while Country Garden Holdings is on the brink of a default.

Risks are spreading to the country’s US$60 trillion financial system. So far, officials have refrained from resorting to a large-scale bailout for the industry, spurring concerns about the economy and putting the government’s 5 per cent growth target at risk. BLOOMBERG, REUTERS