Mortgage Rates Fall in December in Multiple Cities

Banks in multiple Chinese cities offered mortgage rates below the benchmark interest rate in December, a sign of efforts to woo homebuyers back to the cooling property market as economic growth continues to slow.
Some banks in several of China’s hottest housing markets, including Shanghai, Guangzhou, Chengdu and Chongqing, are offering mortgage rates to first-time home buyers lower than the five-year benchmark rate of 4.9% set by China’s central bank, data from the online financial service platform Rong360 show.
The lowest rate was 4.02%, offered by HSBC in Chongqing for first-time home buyers with good credit. Several other banks in Chongqing offered mortgage rates as low as 4.41%.
As banks in big cities start to lower their mortgage rates, it’s likely that the national average mortgage rate for first-time home buyers will see a decline in December for the first time in two years.
While vowing to maintain policies to reduce risk in the property market, a statement issued Monday by the Ministry of Housing and Urban-Rural Development did not include some of the tough language present in last year’s release, such as the government’s aim to “adhere to the regulatory target unwaveringly and without any relaxation.”
Shanghai used to have the lowest average mortgage rates among big cities. Several banks recently further cut their rates. The lowest mortgage rate offered to first-time buyers with good credit among China’s four largest state-owned banks was 4.66%, according to Rong360’s data.
China’s average mortgage rate stopped climbing last month after rising for 22 straight months. The mortgage rate for first-time home buyers across the country averaged 5.71% in November, the same as in October. For mortgages on second homes, the average rate fell to 6.06% from October’s 6.07%.
China’s top policymakers have already softened their tone when laying out the direction of policy for the real estate market next year.
The housing ministry’s statement this week struck a similar tone to that of the three-day Central Economic Work Conference, which wrapped up Friday. After the conference, the central government said it will continue to restrain speculative investment in real estate but would “implement policies according to specific circumstances of each city.”
Those cities with higher inventory pressure might shift to a looser credit policy, such as lower requirements on down payments, according to a report by consultancy China Real Estate Information Corp. (CRIC). Mortgage rates will further decline as demand climbs and liquidity at banks improves, according to the report.

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