Four large Chinese state-owned banks announced on Thursday that they will cut interest rates on existing home loans for first-time home purchases, at a time when the country’s real estate sector is facing a crisis.
The Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank said in a statement carried by the official Xinhua news agency that the adjustments will take effect from September 25.
The measure will benefit 40 million customers, according to analysts cited by the agency.
This decision comes after regulators decided last week to optimize real estate credit policies to reduce borrowers’ interest expenses and promote the “stable and healthy development” of the sector.
The authorities have also recently announced measures to increase the number of people who can be considered homebuyers for the first time, a definition in which local governments will now also be able to include households in which there is at least one member who is not an owner. of a property in your area. name, regardless of whether the family has already applied for a loan.
The crisis in the real estate sector, whose weight in the National Domestic Product (GDP) is estimated at around 30%, is one of the main factors behind the slowdown in the Chinese economy.
In 2021, Chinese regulators restricted the sector’s access to bank credit, causing a liquidity crisis.
One of the largest construction companies in the country, the Evergrande Group, has collapsed and dozens of other groups are negotiating to restructure their debts. The most recent is Country Garden, which is among the 500 largest companies in the world.
The consequent distrust of potential buyers led to a slowdown in the market and a worrying drop in prices.
The real estate sector concentrates 70% of the wealth of Chinese families and 40% of the guarantees held by banks, according to estimates by Citigroup Inc. The impact on household wealth also reduced the appetite for consumption, in a second blow to growth.
Source: TSF
