Country to Relax Mortgage and Down Payment Rates for Second Home Buyers
The country is planning to cut down mortgage and down payment rates to a level that can accommodate home buyers for the first time since 2008 financial crisis, thus making it the biggest move of the year in China’s hope to boost its economy that is being threatened by a decrease in the housing market.
Those planning to buy a second home can avail of a 30 percent discount on the mortgage rates iff they have fully paid their previous home mortgage loans, a privilege that was only limited to first home buyers. Down payment levels are also cut by 30 percent down from 70 percent based on the announcement that was released by the People’s Bank of China and the China Banking Regulatory Commission. The loosening up of lending rules to home buyers was joined by steps in increasing financing to cash strapped developers that may have problems in paying their debts if the downturn in the property continues to persist.
But several analysts are throwing caution to the wind as investors are thinking that the market and a broader economy is poising to stage a recovery. Plus a excess of unsold and unoccupied homes and expectations of another price decline might temper a rebound. These came at the eve of the National Day holidays that is signaling the central authorities are serious in preventing any further decline in the property market.