Down payment, mortgage rate to be lowered for China’s first-and second-time home buyers

CHINA’S financial regulators cut the down-payment requirements for first- and second-time home buyers and lowered rates on existing mortgages, another major effort to halt a slump in the country’s residential property market. 

The minimum down payment will be 20 per cent for first-time buyers and 30 per cent for second-time buyers, according to a joint statement from People’s Bank of China and National Administration of Financial Regulation on Thursday. 

The central bank also approved a rate cut on existing mortgages for first homes, according to the same statement. 

“The reduction in the interest rate of existing housing loans can save interest expenses for borrowers, which helps expand consumption and investment,” the PBOC said in a statement.

Last week, the central government allowed local governments to scrap a rule that disqualifies people who’ve ever had a mortgage – even if fully repaid – from being considered a first-time homebuyer in major cities. At least four major cities have since adopted it.

China’s real estate sector is under significant stress, with Country Garden Holdings posting a record loss and risks spreading to the country’s US$60 trillion financial system.

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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