Real estate (Photo: Xinhua)
China’s six large state-owned commercial banks, including the Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China, said on Thursday that they will gradually implement a new pricing mechanism for commercial personal housing loan interest rates, starting from Friday.
This means that the requirements for improving the pricing mechanism for commercial personal housing loan interest rates, announced by the People’s Bank of China (PBC) a month ago, will soon be officially implemented, state broadcaster CCTV reported on Thursday. According to the banks’ statements and industry experts, this move aims to further support the deepening of interest rate marketization reform, promote the stable and healthy development of the real estate market, and boost consumption.
Experts said that this move will help stabilize the scale of existing housing loans and continuously enhance market confidence.
The loan interest rate repricing period was previously uniformly set at one year, which could not quickly reflect changes in market supply and demand, leading to significant disparities between new and existing housing loan rates, CCTV reported.
According to these banks, under the new pricing mechanism, they will explicitly end a restriction saying that the minimum repricing period for housing loan interest rates must be one year. Instead, home buyers can choose to reprice at intervals of three, six, or 12 months.
Industry experts applauded this new measure for its anticipated positive impact on the housing market.
The introduction of the new pricing system for home loan interest rates once again reflects the government’s determination to boost real estate, an important pillar of China’s economy, Dong Liming, an expert in urban planning at Peking University, told the Global Times, noting that the measure will help stabilize the scale of existing housing loans and enhance market confidence.
Yan Yuejin, a vice president at the Shanghai-based E-house China R&D Institute, told the Global Times on Thursday that the new move helps promote the flexibility of existing home mortgages and interest rates, representing an innovation in pricing rules.
Additionally, it will continuously enhance market confidence, as the reform focuses on reducing mortgage costs, which is expected to boost demand for purchasing homes, Yan noted.
The PBC, the central bank, issued an announcement at the end of September saying that in order to better reflect changes in market supply and demand, and protect the legitimate rights and interests of borrowers and lenders, it will improve the interest rate pricing mechanism for commercial personal housing loans starting on November 1.
In addition to the six major commercial banks, other commercial banks will gradually issue statements clarifying the new pricing mechanisms for personal housing loan interest rates, CCTV news reported.
Once the new mechanism is implemented, the PBC will no longer uniformly adjust the interest rates for existing housing loans, the report said.
Thursday’s news came just a few days after the real estate markets in first-tier cities picked up. This trend followed optimized policies nearly one month after their introduction in late September.
“China’s real estate market has begun to bottom out after three years of adjustments under the influence of a series of policies… We predict that October’s data will show a positive and optimistic result,” Minister of Housing and Urban-Rural Development Ni Hong told a press conference on October 17.