Phased easing of initial housing loans in selected cities a few months after the floor of the interest rate, the people's bank of china, the bank of china, and the bank's superintendence of insurance, announced on 5 december the establishment of a dynamic adjustment mechanism for the first housing loan policy, which clearly links the housing loan policy to the trend in the price of new housing. How does this policy adjustment look? What are the implications for home buyers
Some cities' first-room loans, lower interest rates, or adjustment
The people's bank, the bank of banks and the bank's superintendence recently issued a circular stating that, starting in the fourth quarter of 2022, municipal governments could conduct a dynamic assessment of the evolution of prices for the sale of newly built residential goods at the local level during the last quarter of the quarter, and from the last quarter to the second month of the quarter. For cities that experienced a decline in the price chain and in the prices of new commercial residential housing during the assessment period over a period of three consecutive months, the lower interest rate on commercial personal housing loans for the first home was relaxed. Local governments, in accordance with the city-by-court principle, are free to decide, starting in the next quarter, to maintain, reduce or cancel the minimum interest rate on commercial personal housing loans for the first home in the locality。
As required by the circular, september to november 2022 was the first assessment period since the launch of the mechanism, and local governments could independently adjust the lower interest rate on the commercial personal housing loan for the first home since january 2023, depending on the local price trend for new housing in late december 2022。
According to industry sources, the actual implementation may sometimes be slow, given that the policy has just been announced. However, the financial administration has given local governments the authority to adjust the floor of the first-quarter mortgage rate at any time in the near future, in line with local real estate market conditions. The timing of policy dividends for home buyers depends on when local governments land and implement adjustments。
According to data from the national statistical office, in november 2022, the price ratio of urban residential goods on all lines fell, with the same year-on-year rise in first-line cities and the same year-on-year decline in second- and third-line cities。
Prior-period policies
Further continuity and deepening
On 29 september 2022, the people's bank and the bank's superintendency issued a circular whereby the eligible city governments could decide to maintain, reduce or cancel the lower interest rate on the first home loan by the end of 2022. At that time, a number of eligible municipalities had reduced the lower interest rate for initial personal housing loans。
The expert described the policy issued as a continuation, albeit deepening, of the earlier phased liberalization of the lower interest rate on first-rate housing, which also gave local governments the right to adjust, and was based on the relativization of prices and trends in the sale of new commodity dwellings。
From the phased liberalization “by the end of 2022” to the establishment of the “dynamic adjustment mechanism” this time, the policy of interest rates on housing loans, linked to the trend in the price of new housing, has been fixed as a long-term mechanism, which will be an important step towards creating a long-term mechanism to support the smooth and healthy functioning of the real estate market。
Dynamic assessments will guide dynamic adjustments. According to the circular, once the ring and the corresponding three-month increase in prices for the sale of new commercial housing during the follow-up assessment period, cities that had already lowered or eliminated the floor interest rate were to be reinstated from the next quarter to implement the lower limit on commercial personal housing loans for the first flat, which was unified nationwide。
Release the support signal
To boost confidence
The circular issued by the people's bank and the bank's superintendence made it clear that the lower limit of the policy on commercial personal housing loans for two housing units was implemented in accordance with the current regulations. This means that only first home buyers are expected to benefit from the policy dividend, and the policy signals to support rigid housing demand are clear。
According to data released by the national statistical office, in november 2022, 51 of the 70 cities in the large and medium to large cities experienced a decline in the price ratio of new commercial housing。
In november last year, the people's bank and the bank's superintendence of insurance introduced 16 measures for financial support for real estate, which clearly set out a reasonable need to support individual housing loans. To support local efforts to implement differentiated housing credit policies based on national policies, and to rationalize local down payment rates and interest rates for individual housing loans, in support of rigid and improved housing needs。
This year, the pressure to drive a steady upturn in the real estate market remains high, and there is an urgent need to boost market confidence through city-driven and well-informed policies. The previous 2023 working meeting of the people's bank of china once again made it clear that 16 measures of financial support for real estate would be implemented this year to support the smooth and healthy development of the real estate market。
It is noteworthy that the dynamic adjustment mechanism of the first housing loan policy is designed to guide local adjustment of the first home loan policy, not the mortgage rate itself, and that the pricing of the mortgage is still subject to consultation between the buyer and the bank. According to xinhua
