China abolishes mortgage floor rates, cuts minimum down payment ratios to boost property market

BEIJING -- China on Friday cut the minimum down payment ratios for individuals' commercial housing mortgages and abolished mortgage floor rates nationwide as the country moves to boost the property market.

The People's Bank of China (PBOC) and the National Financial Regulatory Administration announced that the minimum down payment ratios for individuals' commercial housing mortgages will be lowered to 15 percent for first-home purchases and 25 percent for second-home purchases.

The PBOC said in a separate statement on its website that the floor level of commercial mortgage rates for first and second homes will be canceled across the country.

Central bank branches can determine the lower limits of commercial mortgage rates in accordance with local conditions, and financial institutions should set the floor lending rates based on their business conditions and borrower risks, the central bank said.

According to the PBOC, the country will also cut the loan rates of the individual housing provident fund, a long-term housing savings plan made up of compulsory monthly deposits by both employers and employees, by 0.25 percentage points from May 18.

On Friday, Chinese Vice-Premier He Lifeng called for efforts to address risks concerning unfinished commercial housing projects, ensure the delivery of housing projects, and push forward the de-stocking of commercial housing.

Local governments of regions with commercial housing stock are allowed to buy some homes at reasonable prices and provide them as affordable housing, He said at a teleconference about ensuring the delivery of housing projects.

He also urged continued initiatives to fend off and defuse debt risks concerning property developers, and ensure the delivery of housing projects.