Chinese banks may be about to lower mortgage rates in a bid to stimulate lending for new home purchases and bulk out developers’ cash levels amid signs of a slowing property market, according to China’s Bank of Communications.
The “overly tight administrative controls” in first- and second-tier cities may be “moderately relaxed” to encourage first-time home buyers and households looking to upgrade, the bank wrote in its “2019 Outlook on China’s Economy and Financial Markets.”
Bank of Communications, one of China’s five largest banks, said that mortgage interest rates may have “peaked” and a due for correction. Easing this policy will spark a release of frustrated demand for new homes, according to Caixin.
“Banks in some cities may lower mortgage rates marginally and hand out the loans at a faster pace,” it said. “That will ease to some point the liquidity squeeze at real estate companies that mainly target first-time home buyers and upgraders.”