China's Banks Reduce Current Mortgage Rates to Bolster Real Estate Sector
China's banks have lowered existing mortgage rates in a move to bolster the real estate sector. This decision is aimed at providing relief to homeowners and stimulating demand in a market that has faced significant challenges. By adjusting these rates, financial institutions hope to make borrowing more affordable, thereby encouraging both new and existing home purchases, which is crucial for the recovery of the real estate market.
TroibNews 
Several commercial banks in China began lowering interest rates on existing housing mortgage loans on Friday, responding to the central bank's decision to cut mortgage rates.
The six largest commercial banks in China have decreased existing mortgage rates to at least 30 basis points below the loan prime rate, and additional joint-stock commercial banks are expected to follow suit. This includes the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, and Postal Savings Bank of China.
Following these adjustments, the average reduction in existing mortgage rates is approximately 50 basis points.
According to the commercial banks, the adjustments to mortgage rates will occur automatically without requiring individual applications from customers. The term "Existing Mortgages Adjustment" was a leading search topic across the apps of these banks on Friday.
The changes are anticipated to benefit around 50 million households and 150 million people by reducing their interest payments by an estimated 150 billion yuan, as noted by Tao Ling, deputy governor of China's central bank, during a previous press conference.
In Beijing, for instance, if the initial mortgage interest rate was 4.4 percent, it has now been revised to 3.55 percent. For a 1 million yuan, 25-year mortgage with consistent principal and interest payments, this adjustment would result in a monthly payment reduction of $469, leading to a total saving of over 140,000 yuan in interest costs.
Recent stimulus policies have invigorated China's housing market, especially in major cities, with a noticeable increase in sales of both new and existing homes. These initiatives are designed to encourage domestic consumption and investment, fostering sustained economic growth.
For more: China's Real Estate: Strong growth in city housing markets since new policies introduced.
Camille Lefevre for TROIB News
The six largest commercial banks in China have decreased existing mortgage rates to at least 30 basis points below the loan prime rate, and additional joint-stock commercial banks are expected to follow suit. This includes the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, and Postal Savings Bank of China.
Following these adjustments, the average reduction in existing mortgage rates is approximately 50 basis points.
According to the commercial banks, the adjustments to mortgage rates will occur automatically without requiring individual applications from customers. The term "Existing Mortgages Adjustment" was a leading search topic across the apps of these banks on Friday.
The changes are anticipated to benefit around 50 million households and 150 million people by reducing their interest payments by an estimated 150 billion yuan, as noted by Tao Ling, deputy governor of China's central bank, during a previous press conference.
In Beijing, for instance, if the initial mortgage interest rate was 4.4 percent, it has now been revised to 3.55 percent. For a 1 million yuan, 25-year mortgage with consistent principal and interest payments, this adjustment would result in a monthly payment reduction of $469, leading to a total saving of over 140,000 yuan in interest costs.
Recent stimulus policies have invigorated China's housing market, especially in major cities, with a noticeable increase in sales of both new and existing homes. These initiatives are designed to encourage domestic consumption and investment, fostering sustained economic growth.
For more: China's Real Estate: Strong growth in city housing markets since new policies introduced.
Camille Lefevre for TROIB News
