Source: Securities Times
Author: Qin Yanling

On May 17, the People's Bank of China and the General Administration of Financial Supervision jointly issued a document to adjust the minimum down payment ratio for personal housing loans, making it clear that the minimum down payment ratio for commercial personal housing loans for the first housing unit will be adjusted to no less than 15%, and the minimum down payment ratio for commercial personal housing loans for two housing units will be adjusted to no less than 25%.

On the same day, the People's Bank of China also announced a reduction in personal housing provident fund loan interest rates and adjustments to commercial personal housing loan interest rates.

See for details:

1. The People's Bank of China decided that starting from May 18, 2024, interest rates on personal housing provident fund loans will be lowered by 0.25 percentage points, the interest rates for the first set of personal housing provident fund loans under 5 years (including 5 years) and 5 years or more will be adjusted to 2.35% and 2.85% respectively, and the interest rates for second personal housing provident fund loans under 5 years (including 5 years) and above will be adjusted to no less than 2.775% and 3.325%, respectively.

2. Abolish the lower interest rate policy for commercial personal housing loans for first and second housing units at the national level.

Affected by this, in the secondary market, the A-share and Hong Kong real estate sectors are rising in a straight line.

The following are the original texts of the three notifications

The minimum down payment ratio for commercial personal housing loans for the first home was adjusted to not less than 15%

According to the central bank, in order to implement the decisions and arrangements of the Party Central Committee and the State Council, adapt to the new changes in the supply and demand relationship in China's real estate market, and promote the steady and healthy development of the real estate market, the notice on matters relating to the personal housing loan policy is as follows: For households that take loans to buy commercial housing, the minimum down payment ratio for commercial personal housing loans for the first home has been adjusted to not less than 15%, and the minimum down payment ratio for commercial personal housing loans for two housing units has been adjusted to no less than 25%.

On this basis, each provincial branch of the People's Bank of China and the various dispatching agencies of the State Financial Supervision and Administration independently determine the minimum down payment ratio for commercial personal housing loans for the first and second housing units in each city under its jurisdiction in accordance with the city government's regulatory requirements and in accordance with city-specific policy principles.

Cut interest rates on personal housing provident fund loans by 0.25 percentage points

The Shanghai headquarters of the People's Bank of China, branches in various provinces, autonomous regions, municipalities directly under the Central Government and planned separate municipalities; policy banks, state-owned commercial banks, postal savings banks of China, and various joint stock commercial banks:

The People's Bank of China decided that starting from May 18, 2024, interest rates on personal housing provident fund loans will be lowered by 0.25 percentage points, the interest rates for the first set of personal housing provident fund loans under 5 years (including 5 years) and 5 years or more will be adjusted to 2.35% and 2.85% respectively, and the interest rates for second personal housing provident fund loans under 5 years (including 5 years) and above will be adjusted to no less than 2.775% and 3.325%, respectively.

Abolish the lower interest rate policy for commercial personal housing loans for first and second housing units at the national level

In order to implement the decisions and arrangements of the Party Central Committee and the State Council, adapt to the new changes in the supply and demand relationship in China's real estate market, and promote the stable and healthy development of the real estate market, the notice on matters relating to the adjustment of interest rate policies for commercial personal housing loans is as follows: the Shanghai headquarters of the People's Bank of China, branches in various provinces, autonomous regions, municipalities directly under the Central Government and planned separate municipal branches; all countries have commercial banks, postal savings banks of China, and various joint stock commercial banks:

1. Abolish the lower interest rate policy for commercial personal housing loans for the first home and two housing units at the national level.

2. In accordance with city-specific policy principles, each provincial branch of the People's Bank of China guides the self-regulatory mechanism for interest rate pricing in each provincial market. According to the real estate market situation in each city within its jurisdiction and the regulatory requirements of the local government, it independently determines whether to set the lower interest rate limit and lower interest rate level (if any) for commercial personal housing loans in each city within its jurisdiction.

3. Banking financial institutions shall reasonably determine the specific interest rate level for each loan based on the lower interest rate limit (if any) determined by each provincial market interest rate pricing self-regulatory mechanism, taking into account factors such as the operating conditions of the institution and customer risk conditions.

If the previous relevant regulations are inconsistent with this Notice, this Notice shall prevail.

Editor/jayden