China relaxes some rules for buying real estate. Among other things, they prefer existing mortgage interest rates for first-time buyers, and in some cities it will be possible to make lower down payments on housing. This was announced today by the Chinese central bank and the Financial Supervisory Authority, which, according to Reuters, want to revive the real estate market.
Possibility of interest reduction
From September 25, first-time home buyers with a mortgage can ask the bank to reduce the interest rate on their existing loans, the two organizations said. The borrower and the bank can agree on one of two ways to reduce the existing mortgage interest rates. Either by reducing the interest rates in existing credit agreements, or by obtaining a new loan with lower rates in exchange for an existing mortgage.
In some cities, the action ratio will also be reduced, i.e. the amount that I have to pay from my own money if I am interested in the property. For the purchase of a first home, this ratio should not be lower than 20 percent, and for the purchase of a second home, not lower than 30 percent. Currently, in most large cities, the ratio of housing for the first housing is approximately 30 percent and for the second housing 40 percent or more.
Beijing is solving problems
Beijing is stepping up efforts to prop up the struggling property market, which makes up about a quarter of China’s economy. One of the largest Chinese developers, Country Garden, reported a record loss of $6.7 billion in the first half of the year. China Evergrande Group is at the center of the crisis in China’s real estate sector. The company announced at the end of last year that its debt had grown to 340 billion dollars. Its financial problems have spread throughout the country’s real estate industry. A number of other developers are defaulting on their debts, leaving behind unfinished construction projects across the country.
source: ČTK
