Shenzhen has eased restrictions for homebuyers following the country's central bank lifting real estate market curbs earlier this month, according to new measures announced by local authorities Tuesday.
Starting yesterday, the minimum down payment ratio for individual housing loans was lowered from 30% to 20% for first homes and from 40% to 30% for second homes.
This adjustment, which will lower the financial threshold for homebuyers, also involves reductions in the lower limit of interest rates on home loans based on the corresponding tenor of the benchmark loan prime rate (LPR).
The mortgage rate floor for first-time homebuyers was decreased to 45 basis points below the corresponding tenor of LPR from the previous level of 10 basis points below. Meanwhile, the minimum mortgage rate for second homes was lowered to 5 basis points below the corresponding tenor of LPR from the earlier rate of 30 basis points above the tenor, as outlined by authorities.
China's one-year LPR was 3.45%, and the five-year LPR, which is typically used as a benchmark for mortgage loans, stood at 3.95%, according to the People's Bank of China's monthly fixing May 20.
In another endeavor to secure affordable housing supplies for its residents, the city's housing and construction bureau unveiled a draft rule Tuesday that aims to boost the availability of affordable rental units by repurposing non-residential properties into residential housing.
The scarcity of land within the city has made it renovation efforts a major option for expanding the stock of government-subsidized rental accommodations. The city plans to marginally adjust the eligibility criteria for buildings earmarked for such conversions, although it will ban these conversions on industrial land with serious pollution or safety hazards that would pose a risk to residents and on warehousing land where flammable, explosive, and highly toxic materials are stored.
Several Chinese cities, including Beijing, Shanghai, Hangzhou, and Chengdu, have recently adjusted real estate policies after the People's Bank of China eased its housing policy May 17. On Monday, Shanghai became the first of China's first-tier cities to reduce minimum down payment ratios and mortgage interest rates.
Guangzhou, the capital city of Guangdong Province, also rolled out a slew of measures Tuesday that include reducing down payment ratios and mortgage interest rates and easing the cap on the number of homes non-Guangzhou residents may purchase.