Shenzhen Banks Ease Up Mortgage Rates, Becoming First in China
China's cross-border banks have started to lower their mortgage rates. According to Mingtiandi, the step by step easing helps people looking for homes in the residential markets. Developers, in turn, have hope that the market is on the right track to recovering, after a year of policies governing monetary issues.
Mortgage rates in the Chinese city have started to mellow down, signaling a halt to the strict property controls the local city government has been proposing and enacting. This also makes Shenzhen one of China's 'tier-one' cities to start doubling down on the policies. China's biggest cities also appear to be following its example.
Most banks in the cities have started to lower their borrowing costs for homeowners. Doing so appears to help Shenzhen's property market lower its expensive rates too. This trend, according to analysts, may start trickling down, with the other Chinese megacities lowering their property rates as well.
In Hangzhou, the local Agricultural Bank of China has started a 'relay mortgage' tactic which helps parents and their children to apply for a loan jointly. Ejin Sight reported that this helps homebuyers, already in their 50s, buy a new home, even though they don't have enough for the down payment because of their age.
The product has yet to become available, although other banks are starting to follow suit. They are re-tooling current rules for getting mortgage loans approved and are re-instating the '10 percent interest rate' scheme for first-time homeowner-buyers. These banks started scrambling for clients amid the effects of a destructive Chinese dispute with the US.
Banks are counting on the current situation, where mortgage portfolios--from these very same banks--are being expanded. If housing prices remain level and more people are looking for new homes, the investment side would start to pick up as well. This would help the national economy and, in turn, trickle down on these banks. The only remaining concern would be to continue being steady amid a continuing back-and-forth between the US and China.
China Merchants Bank branches in Shenzhen have started to offer lower rates by as much as 5 percent above the national benchmark. According to analysts, this is about lower by 10 percent from two days ago. The national interest rate benchmark sits at 4.9 percent currently, as it is being offered by the People's Bank of China.