Beijing's new housing policies help to release the demand for buying houses and promote the stable and healthy development of the city's real estate market, said experts on Wednesday.
The minimum down payment ratio for individual commercial mortgages for homes has been lowered from 30 percent to 20 percent for first-home purchases, according to a circular released by several bodies on Wednesday, including the Beijing Municipal Commission of Housing and Urban-Rural Development and the Beijing municipal branch of the People's Bank of China.
For second-home purchases, the minimum down payment has been lowered to 35 percent if the property is located within Beijing's fifth ring road, and 30 percent if located outside the ring.
"Reducing the down payment has become an important tool in Beijing's current property market policy, showing a positive and very obvious effect on reducing our purchasing costs. To a large extent, the threshold for buying a house is further lowered, which helps to release and boost residents' demand for purchasing homes," said Yan Yuejin, research director at Shanghai Yiju Real Estate Research Institute.
The lower limit of the interest rate for first-time buyers acquiring a commercial personal housing loan has been adjusted to no lower than the loan prime rate (LPR) - a benchmark set by the central bank - of the corresponding period minus 45 basis points. After the adjustment, the lower limit of the mortgage interest rate for a term of more than five years currently stands at 3.5 percent, the notice said.
The interest rate on second homes outside the fifth ring road will be cut to 3.7 percent and to 3.9 percent for second homes within the ring road.
"Lowering the interest rate on commercial mortgages will help more people improve their ability to buy houses, converting potential demand into effective demand and reducing the burden on buyers," said Zhao Xiuchi, a professor with the Capital University of Economics and Business. The notice also announced to raise housing provident fund loans. For borrowers who apply for personal housing provident fund loans to purchase green buildings, prefabricated buildings, or ultra-low energy-consumption buildings, the loan amounts will be increased by 400,000 yuan (about 55,030 U.S. dollars), but the maximum loan amount does not exceed 1.6 million yuan (about 220,000 U.S. dollars).
This is the second batch of measures that Beijing has announced in the last two months to optimize the city's housing policies.
On April 30, a notice permitted families with a Beijing hukou to buy one additional commercial house outside the fifth ring road, even if they already own two homes in Beijing. Single adults with a Beijing hukou, as well as single adults without a Beijing hukou but with a record of paying social insurance or income tax in the city for at least five consecutive years, were also permitted to purchase one additional property outside the fifth ring road, even if they already own one home in the city.
A number of other Chinese cities, including Shanghai, Hangzhou and Chengdu, have also adjusted their real estate policies recently, with measures including those to ease purchase restrictions and encourage trade-ins of commercial housing.
Beijing's new housing policy boosts house purchase demand
