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The
down payment for first-time homebuyers in Hefei city and Wuhan
city have been lowered from 20% to 15% - the lowest ratio
allowed that the central bank announced last week, Shanghai
Securities News reported on Wednesday.
The ratio for second-time homebuyers was cut from 30% to 25%,
the report said.
Additionally, some banks in Wuhan have cut mortgage loan
interest rates for first-time homebuyers by 30 basis points
(bps) to 3.25%, after China abolished the floor level of the
interest rates last week. Some lenders in Changsha city cut the
rate by 10 bps to 3.65%, local media said.
Lenders in cities across the nation, including Beijing, Shanghai
and Shenzhen, have announced lowering interest rates of housing
provident funds by 25 bps.
China announced "historic" steps on Friday to stabilize its
crisis-hit property sector, including further lowering mortgage
interest rates and down payment requirements.
Since the property market began its steep downturn in 2021, a
string of developers have defaulted, leaving scores of idle
construction sites, and sapping confidence in what had for
decades been the preferred savings instrument for the Chinese
population.
The measures are encouraging for homebuyers and investors, Jeff
Zhang, an equity analyst at Morningstar, said in a research
note.
Still, "we caution that potential buyers may remain on the
sidelines amid falling home prices, and policy tailwinds will
likely require a longer time to translate into a pickup in home
sales," said Zhang.
The central bank also announced it would set up a relending
facility for affordable housing that it says would result in 500
billion yuan ($69.06 billion) worth of bank financing.
But the funds will help Chinese developers on a very selective
basis, said S&P Global Ratings credit analyst Ricky Tsang.
"Only completed projects may be acquired--this means distressed
developers, whose projects are most likely uncompleted, cannot
benefit," said Tsang.
($1 = 7.2396 Chinese yuan renminbi)
(Reporting by Ziyi Tang and Ryan Woo; Editing by Chizu Nomiyama)
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