The government has announced a reduction in required down payments and a waiver on stamp taxes for property deals. But most enabling regulations and full details have yet to be released.
For those buying their first home, the minimum down payment was cut to 20% from 30%, and banks were allowed to charge as little as 70% of the central bank base lending rates for such mortgages.
The central government gave commercial banks freedom to decide their own mortgage rates, ranging from 5.04% to 7.2%. But among the four major commercial banks, Agricultural Bank of China was the only one that had published its lending rate as of Monday.
Chinese banks are mostly state-owned commercial banks, which have been less affected by the global financial crisis. Most lent cautiously to the more credit-worthy borrowers.
Analysts said banks were struggling to keep a balance between attracting borrowers and maintaining profit margins.
Guo Tianyong, a banking expert at the China Central Finance and Economics University, said, ‘As mortgage lending is shrinking, each commercial bank is waiting for others to announce the rates first, so they can try to compete with an even lower rate. Banks and buyers may need to wait for a long time.’
Beijing authorities, and those in other cities, said they needed more time to figure out who could get tax breaks and wouldn’t have a plan ready to announce until the end of this year.
Source: China View