China’s biggest commercial city already offers the lowest rate among first-tier mainland cities
PUBLISHED : Friday, 10 August, 2018, 1:33pm
UPDATED : Friday, 10 August, 2018, 11:18pm
China mortgage rules tightened to curb people divorcing to qualify to buy second homes24 Mar 2017
HONG KONG & CHINA
Big cities lead China home prices in July19 Aug 2013
HONG KONG & CHINA
Drop in mainland China home prices causing alarm21 Jun 2018
HONG KONG & CHINA
Increase in China home prices expected to slow with new launches22 May 2013
What if China home prices keep falling?16 Feb 2015
Appetite for China land plots drops the most since 20149 Aug 2018
HONG KONG & CHINA
Chinese property firms face complaints as building rush hits safety and quality8 Aug 2018
Yuan’s drop adds insult to developers’ injury as their dollar debts swell6 Aug 2018
Shares of China’s property developers rose on Friday on reports that two state-owned banks in Shanghai have lowered their first-home mortgage rates to ease buying restrictions after two years of controls to cool the overheated market.
THIS WEEK IN ASIA
Get updates direct to your inbox
Property agents and mainland state media said borrowers would be eligible for a 10 per cent discount off the benchmark interest rate, up from a previous 5 per cent, at the Shanghai branches of the Industrial and Commercial Bank of China and the Agricultural Bank of China from Friday. This means the rate will be lowered to 4.41 per cent from 4.655 per cent, they said.
In the mainland, China Vanke jumped 3.1 per cent to 23.18 yuan, China Merchants Shekou industrial Zone Holdings was up 2.6 per cent to 17.27 yuan and Poly Real Estate gained 1.5 per cent to 11.70 yuan. Nacity Property Service jumped 10 per cent to 26.80 yuan and Shanghai Wanye Enterprises surged 6.5 per cent to 12.44 yuan. A property stock gauge under the benchmark Shanghai Composite Index rose 1.1 per cent.
In Hong Kong, Agile Group rose 4.7 per cent to HK$12.34. Guangzhou R&F Properties soared 5.6 per cent to HK$15.02 and Sunac China Holdings was up 5.5 per cent to HK$26.10.
The rate cut was refuted by the two banks after the market closed, which analysts said, reflected the level of sensitivity to China’s mortgage policy. But an ICBC executive confirmed that the lenders were compelled to retract the cut following “intense reaction in the market” that led to share price swings.
ICBC issued a statement on Friday reiterating that its mortgage policy remains unchanged.
“ICBC has always clung on to the policy of ‘differential credit policy for different homebuyer groups’. … we will strictly implement the state policy on property market,” it said.
E-house China E&D Institute analyst Yan Yuejin said the retraction represented a rift between the central government and banks’ interests.
“From the banks’ commercial perspective, they are inclined to ease the policy,” Yan said, adding that with funding costs lowered for banks, lenders were motivated to cut rates.
The overnight Shanghai Interbank Offered Rate has dropped to its lowest level since August 2015.
ICBC has always clung on to the policy of ‘differential credit policy for different homebuyer groups’. … we will strictly implement the state policy on property market
A lower mortgage rate, if implemented, would have been an initial reversal to the past two years’ effort to rein in home prices, underscoring the authorities’ attempt to revive a sluggish Shanghai property market to help fuel growth amid mounting worries of the overall economic slowdown.
In July, secondary home market transactions fell to 13,800 units from 15,500 units in June, and against the monthly 18,000-20,000 unit range for the past five years, according to Centaline Property Shanghai.
The official secondary home price index of China’s biggest commercial city has also sunk 1.83 per cent in June on the year, slumping for seven straight months.
Yan said first-time homebuyers drove China’s consumption, which could boost economic growth as the trade war with the US worsens.
Shanghai already offers the lowest mortgage rate among China’s first-tier cities, regardless of whether ICBC and Agricultural Bank cut their rates. Local branches of the China Construction Bank offer 10 per cent discount to first-time buyers.
In contrast, Beijing’s mainstream mortgage rate for first-time buyers stands at 10 per cent above the benchmark rate, and some joint-stock commercial banks offer a higher 15 per cent. Last month, banks in Shenzhen raised the first-home mortgage to 15 per cent above the benchmark from 10 per cent, while those in Guangzhou lowered the rate to 10 per cent above the benchmark from 15 per cent.
Additional reporting by Zhang Shidong
This article appeared in the South China Morning Post print edition as: Developers get boost on Reports of rate cut
Josh Zimmerman and Caitlyn RintoulThe West Australian Sunday, 2 June 2019 2:00AM Astor Arcade owner Bruno Zimmermann.Picture: Ian Munro Pr...
There will be only a few times during your life when you will be offered a relatively safe investment return of 10 % to 15% per year. ...
Best Asia Real Estate Editor's Comments: The below article points out the fact that baby boomers, after working a lifetime to ach...
Best Asia real estate editor's comments; Just one more piece of proof that investors are pulling out of the Australian real estate ...