China to cut interest rates on provident fund loans for first-time home buyers, to refund individual income tax for some buyers
FEATURES POLICY & REGULATION
China to cut interest rates on provident fund loans for first-time home buyers, to refund individual income tax for some buyers
FEATURES POLICY & REGULATION

China to cut interest rates on provident fund loans for first-time home buyers, to refund individual income tax for some buyers

 

>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<

 

 

The People’s Bank of China (PBOC) said on Friday it would lower the interest rate for loans from the Housing Provident Fund by 0.15 percentage points for first-time home buyers, effective from Oct. 1, suggesting an urgency for policymakers to prop up the embattled property market.

Following the rate cut, the 5-year-and-below interest rate for first-time buyers borrowing from the government’s housing provident fund to finance a home purchase would stay at 2.6%, while the 5-year-above rate would stand at 3.1%, the People’s Bank of China (PBOC) said in a statement on its website. China last adjusted the housing provident fund interest rate in 2015.

The interest rate of the fund for buyers’ second home purchase will unchanged unchanged, the PBOC said.

“The interest rate cut for housing provident fund loans targets home buyers with rigid housing demand,” said Yan Yuejin, research director of Shanghai-based E-house China Research and Development Institute.

“Such a move, together with the finance ministry’s policy support today and the central bank’s policy yesterday, are the three major stimulus measures to stabilise the property market. They will shore up the housing market in the fourth quarter remarkably.”

Earlier on Friday, China’s Ministry of Finance said that it will refund individual income tax for home buyers if they sell their homes and purchase a new one in the same city within one year after selling.

If the amount of new housing purchased is more than or equal to the amount of housing sold, all personal income tax paid will be refunded, effective from Saturday until Dec. 31, 2023, it said.

The moves on Friday came after the authority on Thursday allowed some cities to cut the lower limit of home mortgage loans for first-time home buyers, part of an effort by authorities to stabilise the ailing housing market.

China will allow some temporarily cut or remove the lower limit of interest rates on new home mortgage loans for first-time home buyers, effective till the end of 2022, according to a notice released by the PBOC and the China Banking and Insurance Regulatory Commission (CBIRC) late Thursday.

For cities where the selling price of new commercial residential housing posted month-on-month and year-on-year declines between June and August 2022, the lower limit of mortgage rates would be relaxed, the central bank said. Read more …

Also on Thursday, the PBOC said at its third-quarter monetary policy meeting that local governments should make better use of city-specific policies to support genuine housing needs, accelerate the use of special loans extended to ensure delivery of residential property projects.

The authority should guide commercial banks to provide supportive financing support, safeguard home consumers’ legitimate rights and interests and promote healthy and steady development of the real estate market, the central bank said.