HomeEconomyThe real estate market is heavy! Central Bank, Banking and Insurance Regulatory Commission

The real estate market is heavy! Central Bank, Banking and Insurance Regulatory Commission

The differentiated housing credit policy will be modified gradually, the People’s Bank of China and the China Banking and Insurance Regulatory Commission announced in a notice on September 29. As a result, qualified city governments can independently choose to maintain, lower, or cancel the lower limit of the local first-home loan interest rate before the end of 2022.

The two departments pointed out that introducing this policy measure is conducive to supporting the city government to make full use of the policy toolbox and promote the stable and healthy development of the real estate market. Banks and customers can negotiate and decide on the exact interest rate level of newly issued first-home housing loans within local rules, which will assist lower residents’ interest costs and better support the rigid housing demand.

According to the research report of Founder Securities, among the 70 large and medium-sized cities tracked by the National Bureau of Statistics, 23 cities meet the specified conditions, including ten second-tier cities and 13 third-tier cities.

The real estate market is heavy! Central Bank, Banking and Insurance Regulatory Commission
The real estate market is heavy! Central Bank, Banking and Insurance Regulatory Commission

Pang Ming, Chief Economist and Director of the Research Department of Jones Lang LaSalle, told the Securities Times and Brokerage China reporters that this policy adheres to the idea and tone of “housing is not for speculation” and is gradually reducing real estate financialization and bubbles. In addition, actively explore new development models under globalization and continue optimizing real estate financial policies, especially differentiated housing credit policies. As a result, the market is developing steadily and healthily, achieving the triple goals of stabilizing growth, preventing risks, and promoting development.

Phased Adjustment Of Differentiated Housing Credit Policies

On September 29, the People’s Bank of China and the China Banking and Insurance Regulatory Commission issued the “Notice on Phased Adjustment of Differentiated Housing Credit Policies” (from now on referred to as the “Notice”),

The “Notice” proposes to adjust the differentiated housing credit policy in stages. Specifically:
First, for cities where the sales price of new commercial housing in June-August 2022 has continued to decline both month-on-month and year-on-year, before the end of 2022, the lower limit of interest rates on first-home commercial personal housing loans will be gradually relaxed. The lower limit of the interest rate policy for commercial, personal housing loans for second houses shall be implemented following the current regulations.

Second, following the principle of “making policies according to the city,” eligible city governments can independently decide to maintain, lower, or cancel the lower limit of the local first-home commercial, personal housing loan interest rate in stages according to changes in the local real estate market situation and regulatory requirements. The People’s Bank of China, The China Banking and Insurance Regulatory Commission dispatched agencies to guide the implementation of the provincial-level market interest rate pricing self-discipline mechanism.

The “Notice” pointed out that the decision to adjust the differentiated housing credit policy in stages is to adhere to the positioning of “houses for a living, not speculation,” fully implement the long-term mechanism of real estate, implement policies according to cities, make full use of the policy toolbox, and better support rigid housing demand, to promote the stable and healthy development of the real estate market.

Pang Ming pointed out to reporters that the expressions of “differentiated housing credit policy” and “within the scope of local policies, banks and customers can negotiate and determine the specific interest rate level of newly issued first-home housing loans” indicate that they will continue to reduce the burden of housing purchases effectively. As a result, mortgage costs can better boost residents’ confidence in housing consumption and better support and meet residents’ rigid and improved housing needs.

Zhang Dawei, the chief analyst of Centaline Real Estate, believes that the first-home mortgage interest rate in more than 80 cities across the country has been reduced to 4.1%. Further reductions can reduce the cost of home buyers and play a positive role in stabilizing market confidence and market expectations.

This practice shows how crucial mortgage interest rates remain in boosting the real estate market. Although the “Notice” mentioned the lower limit of interest rates for commercial, personal housing loans for the first housing set, Yan Yuejin, Research Director of the Think Tank Center of E-House Research Institute, said that it could be adjusted. “Stage maintenance, reduction or cancellation,” but from the perspective of policy tone, the main focus is on the orientation of “downgrade.” The purpose is to reduce residents’ interest expenses and better support rigid housing demand.

At Least 23 Cities Are Included In The Scope Of The Policy

According to the “Notice,” the cities that are allowed to gradually relax the lower limit of the interest rate of first-home commercial, personal housing loans before the end of 2022 must be cities in which the sales prices of new commercial housing in June-August 2022 have continued to decline month-on-month and year-on-year.

According to the Founder Securities Research Report statistics, among the 70 large and medium-sized cities tracked by the National Bureau of Statistics of China, 23 cities meet the conditions stipulated in the “Notice,” including ten second-tier cities and 13 third-tier cities. Tianjin, Shijiazhuang, Dalian, Harbin, Wuhan, Guiyang, Kunming, Lanzhou, Wenzhou, Anqing, Quanzhou, Jining, Yichang, Xiangyang, Yueyang, Changde, Zhanjiang, Guilin, Beihai, Luzhou, Dali, Qinhuangdao, Baotou.

“This reduction is mainly aimed at cities with weak real estate markets in the third quarter.” Yan Yuejin said home buyers in such cities still believe that mortgage interest rates are too high, so continuing to lower interest rates has become the public’s voice. The introduction of such policies will inevitably increase the autonomy of banks. In the fourth quarter, these cities will usher in a new round of mortgage interest rate cuts, which will help reduce mortgage costs and boost market transactions.

The Optimization Of Local Real Estate Control Policies Will Increase

Before this, the State Council’s executive meeting on August 24 deployed a package of economic stabilization measures and recommended allowing local “one city, one policy” to use credit and other policies to support rigid and improved housing demands adequately.

The third quarter regular meeting of the Monetary Policy Committee of the People’s Bank of China also pointed out that it is necessary to make full use of the policy toolbox according to the city’s policies, support rigid and improved housing demand, promote the accelerated implementation of particular loans for “guaranteed housing” and increase the intensity as needed. In addition, it guides commercial banks to provide supporting financing support, safeguard the legitimate rights and interests of housing consumers, and promote the stable and healthy development of the real estate market.

Pang Ming predicts that in the future, the pace of optimization and implementation of real estate control policies in various regions will be further accelerated, and the optimization and adjustment efforts will be further intensified. Taxes, fees, other directions, and extension and expansion to hot first- and second-tier cities.

In Pang Ming’s view, in the process of promulgating and implementing more policies and measures, credit policies can work in concert with land policies and tax policies to support rigid demand and improved housing demand, promote the effective release of residents’ reasonable housing demand, and effectively promote Real estate investment has resumed. The credit risk, debt risk, capital chain, and cash flow risk of real estate companies and the accompanying spillover risks to the upstream and downstream industrial chains are expected to be prevented and contained.

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -
English News Daily Jasper Ai

Most Popular

Recent Comments

DMCA.com Protection Status