China Lowers Down Payments for those Planning to Buy Second Homes
China has lowered the down payment on those planning to use their housing provident funds in buying a second home, thus signaling the intention to prop up the property market during the time of battered confidence. In a statement given together by the Ministry of Finance, the central bank and Ministry of Housing and Urban-rural Development that the minimum payment for those who use their housing funds in purchasing a second home is lowered to 20 percent from 30 percent only if the buyer paid off their previous mortgage.
The statement also included that the four most expensive cities in China can decide by themselves if they should follow the decision to lower its down payments. The move gives second homebuyers those same policies that are enjoyed by first time buyers, which will also encourage more potential buyers to buy second homes. The move also followed the interest rate cut, after the benchmark-lending rate for five years or in longer loans was lowered to 5.15 percent, which is the same rate for housing provident fund loans. Current housing policies will be the most accommodating in years in concern with recent disappointing economic data and eroding confidence.
Real estate investment growth in China slumped further to 4.3 percent in the first seven months,, a drag on the Gross Domestic Product that is growing at 7 percent. Although analysts believe that the investment is already hitting bottom as property sales rebounded since the second quarter due to policy easings. The batch of stimulus policies has combined with fresh construction projects that offered in the market that make up for robust housing sales in September and in October.