China’s central bank is giving local governments leeway to lower mortgage rates for first-time home buyers, in a bid to shore up the nation’s slumping real-estate market.
The People’s Bank of China said late Thursday that cities that have recorded month-on-month and year-on-year drops in home prices between June and August can relax the floor on mortgage rates for first-time buyers.
The move could help boost confidence among prospective home buyers at a time when sentiment has been hurt by the failure of more than 300 property projects to deliver homes on time, resulting in mortgage boycotts.
The central bank said local authorities can decide whether to maintain, lower or even scrap the floor on mortgage rates for first homes by the end of 2022. The policy for second homes remains unchanged.
The PBOC has deployed this tactic before, when it lowered the floor on first-home mortgages nationwide to 20 basis points below benchmark loan rates in May.
China’s property market has continued to slump despite dozens of cities in recent weeks relaxing their home-purchase limits, and the central bank cutting benchmark interest rates to boost demand.
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