Commercial banks in Beijing and Shanghai have been ordered to cut the discount on mortgage rates given to first-time homebuyers, from the current 30 percent down to 15 percent of the property’s total value, according to a news report.
The 30 percent discount on mortgage rates had been carried out since end-2008.
Under the new policy implemented in Beijing and Shanghai, first-time home buyers will be able to effectuate a down payment of less than 30 percent of the property’s total value, and as much as 50 percent for second-home purchase; and 1.1 times the benchmark interest rate.
The central government announced the new rules on September 30, including the short-term suspension of bank loans for third-home purchases and the limitations implemented to those intending to purchase multiple properties.
A month after the new measures were implemented, trading volumes in many big Chinese cities have declined. According to data compiled by soufun.com, 20 out of the 35 monitoring cities recorded a decline in trading volume, with Guangzhou’s down 69.61 percent and Beijing’s falling 27.24 percent.