Declines in mortgage rates spread to China’s second-tier cities
Mar 14, 2019 (China Knowledge) - Mortgage rates in China’s tier-2 cities are falling as the country’s property market slows down under pressure from government curbs and economic headwinds.
Mortgage rates in Hangzhou, Nanjing, Zhengzhou and Hefei are reported to have fallen significantly last month, following in Shenzhen’s footsteps.
Following a surge in property prices during 2016, regulators quickly moved in to impose curbs on home purchases. This stance has been softened in recent times with increasing pressure on China’s economic growth. In fact, some cities have already started to rollback on housing transaction curbs, despite regulators saying that real estate financing policies have not changed.
According to the China Banking and Insurance Regulatory Commission (CBIRC), banks will continue to extend financing support for homebuyers with actual housing needs but will continue with strict controls for buyers looking to invest or speculate on the housing market by increasing down payment requirements and mortgage rates.
However, mortgage rates for first-time homebuyers are quickly moving towards the five-year benchmark interest rate of 4.9% set by the central bank. A total of 44 banks have lowered mortgage rates in February, up from just 34 in January.
Rates in China’s first-tier cities are currently the lowest with intense competition forcing banks to undercut each other in terms of rates to gain market share. For second-tier cities, rates showed sharper decline in February with mortgage rates in Nanjing and Nanning falling by 20 and 12 basis points respectively.
Mortgage rates in third and fourth-tier cities currently remain flat.
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