Sending a positive signal to the market, Beijing reduces down payment and loan interest rates for home purchases
Two months later, Beijing issued new real estate policies.
This evening, Beijing Municipal Housing and Urban-Rural Development Commission, Beijing Branch of the People's Bank of China, Beijing Regulatory Bureau of the State Financial Supervision and Administration, and Beijing Housing Provident Fund Management Center issued the "Notice on Optimizing Policy Measures for the Stable and Healthy Development of the City's Real Estate Market", which clearly stated that the minimum down payment ratio for the first home will be adjusted from 30% to 20%, and the minimum loan interest rate will be reduced from the previous 4.05% to 3.5%.
The release of this new real estate policy in Beijing means that after the release of the "Notice of the People's Bank of China on Adjusting the Commercial Personal Housing Loan Interest Rate Policy" on May 17, my country's first-tier cities have significantly relaxed their housing loan policies.
Previously, Beijing had issued a policy to reduce the down payment ratio for first-time home buyers in the six urban districts and non-six urban districts to 30%, abolished the restriction that divorced families cannot buy homes within three years, and introduced optimization measures such as "recognizing housing but not loans" and allowing Beijing-registered families with two homes to purchase a new home outside the Fifth Ring Road. Judging from the Beijing real estate market data in May, the policy effects are gradually showing: the number of second-hand residential properties signed online for the whole month was 13,383, a month-on-month increase of 0.2% and a year-on-year increase of 3.1%.
According to the "Notice", the lower limit of the first home loan interest rate in Beijing has been adjusted to no lower than the loan market benchmark rate for the corresponding period minus 45 basis points. After the adjustment, the lower limit of the mortgage interest rate for a term of more than 5 years is currently 3.5%.
According to the previous pricing formula for first-home mortgages in Beijing, the six urban districts are LPR plus 10 basis points, while non-urban districts are LPR plus 0 basis points. Based on a loan principal of 1 million yuan and equal principal and interest payments over 30 years, after the new policy is implemented, homebuyers' interest expenses will be reduced by 113,000 yuan.
In terms of down payment ratio, the "Notice" clearly states that the minimum down payment ratio for the first home in Beijing will be adjusted from 30% to 20%, and the second home will be divided into within and outside the Fifth Ring Road, with minimum down payment ratios of 35% and 30% respectively.
So far, Beijing has become one of the only three cities in the country with a 20% down payment requirement for first-time homebuyers, along with Shanghai and Shenzhen. Yan Yuejin, research director of E-House Research Institute, said that after the "May 17" new policy, down payment ratios and loan interest rates have generally been reduced across the country. "For Beijing, this reduction in down payment ratios and loan interest rates has further lowered the threshold for home purchases, which is conducive to promoting the release of rigid demand and improved housing demand."
In addition, in terms of differentiated policies, Beijing no longer divides into six urban districts and non-six urban districts, but rather divides into areas within the fifth ring road and outside the fifth ring road, similar to areas within and outside the outer ring road in Shanghai.
Chen Wenjing, director of market research at China Index Academy, believes that the current adjustment is within and outside the Fifth Ring Road, which is consistent with the area adjustment of the purchase restriction policy on April 30, and is more conducive to policy implementation and execution.
This "Notice" also supports housing needs by adjusting the minimum down payment ratio of housing provident fund personal housing loans, increasing the housing provident fund loan amount under certain conditions, supporting the improved housing needs of families with many children, and organizing housing "old for new" activities.
Yan Yuejin said that judging from the market feedback on the new real estate policies in several other first-tier cities, the policy proposed in the Notice that "for families with two or more children registered in the city, the second home purchased will be recognized as the first home in personal housing loans" may bring positive market effects. "Because families with many children have a large demand for buying and changing houses, this policy will help such families continue to enjoy the first home policy."
From the perspective of market performance, after the implementation of the "May 17" new policy, Shanghai, Shenzhen and Guangzhou quickly followed up with relevant measures, and the activity of the new and second-hand housing markets increased. In particular, the second-hand housing transaction in Shanghai increased significantly, and the housing sentiment in Beijing also rebounded, and the second-hand housing transaction volume remained at a certain scale. However, compared with other cities, the performance of Beijing's new housing market is still weak, and the market continues to adjust.
Chen Wenjing said that as Beijing implements a number of measures such as reducing the down payment ratio, lowering mortgage interest rates, providing more policy support to families with multiple children, and supporting housing "old for new", it is expected to significantly ease the wait-and-see sentiment of home buyers and promote housing demand into the market.
"Beijing's policy optimization has further released positive signals and will help repair overall market expectations." Chen Wenjing analyzed that in the short term, the activity of Beijing's real estate market is expected to increase, and the chain of new and second-hand houses is also expected to accelerate rotation. The active transaction volume of second-hand houses will also release more improvement demand for new houses.
Industry insiders generally believe that Beijing's purchase restriction policy has not yet been adjusted, and there is still room and expectations for optimization in the future. As the policy effects in core cities gradually become apparent in the second half of the year, the national market is also expected to gradually bottom out and stabilize.
