China will reduce existing mortgage rates by the end of October (Image: Getty Images Signature/Canva Pro)
The central bank of China reported on Sunday (29) that it will tell banks to reduce mortgage rates for existing home loans before October 31, as part of sweeping measures to support the country's housing market as the economy slows.
Commercial banks must, in batches, reduce interest rates on existing mortgages to no less than 30 basis points below the LPR rate, the central bank's benchmark rate for mortgages, according to a statement released by the People's Bank of India. China.
Existing mortgage rates are expected to be reduced by about 50 points on average.
Across China, a series of measures, including reductions in down payment fees and mortgage rates, were introduced this year to support the struggling property market.
But stimulus measures have struggled to boost sales or increase liquidity in a market shunned by buyers and that remains a major drag on broader economic growth.
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Adding to these efforts, the city of Guangzhou announced on Sunday the end of all restrictions on home purchases, while Shanghai and Shenzhen said they will ease restrictions on home purchases by non-local consumers and lower the minimum entry fee for first home buyers for no less than 15%.
Sunday's announcements came after China on Tuesday unveiled its biggest stimulus package since the coronavirus pandemic. Covid-19 to bring the economy out of its deflationary state.
The reduction in the mortgage rate set by the central bank aims to alleviate the mortgage burden on property owners, seeking to boost the real estate market and weak domestic consumer demand.