Chinese homeowners cheer Beijing’s move to cut mortgage rates by a half point

Chinese homeowners hailed Beijing’s decision to cut mortgage rates by a half-point, though some believe the move will not spark a recovery

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Buildings under construction in Shanghai. Photo: AFP

Published: 12:00pm, 25 Sep 2024

Chinese homeowners struggling to repay their loans hailed Beijing’s decision to cut mortgage rates by a half point, though analysts and economists believe the move will fail to spark a broad economic recovery.

On Tuesday, China unveiled its stimulus package for the troubled property sector, which included the mortgage-rate reduction and a cut in the down-payment ratio for second homes to 15 per cent from 25 per cent.

Pan Gongsheng, the governor of the People’s Bank of China, said on Tuesday that the moves will the ease mortgage burdens on an estimated 150 million people, cutting their annual interest expenses by about 150 billion yuan (US$21.3 billion).

Homeowners in China said they were supportive of the central bank’s actions.

“I do not need to plan premature repayment on my home loans any more,” said Jessie Deng, a financial professional at a construction firm. She bought her home in Guangzhou in 2021, when the annual loan rate stood at 5.3 per cent, and needed to repay more than 10,000 yuan a month, which is a normal employee’s monthly salary in the city.

The pressure of her repayments amid an economic downturn pushed Deng to apply for early repayment just two weeks before Beijing unveiled its stimulus measures.