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China’s ‘shortcut to supporting real estate’

| Business Top stories | Usa news


The Chinese authorities have already stepped up their efforts to cushion the falls of the struggling real estate sector:

  • PBOC rate cuts have reduced mortgage rates (admittedly the cuts are very small, at least so far)
  • the “three red lines” borrowing rule has been relaxed (link here to read more)

Reuters now has a small article on another potential step:

  • Reduce the high mortgage down-payment ratios that many municipal authorities have adopted to cool speculation, up to 80% in some places. Mortgages rose just 11% year-over-year in the third quarter, the slowest rate since 2013. A reduction in these would likely bring some buyers back into the market and put a floor under the price drop. This, in turn, could rekindle interest in mergers and acquisitions and improve developers’ balance sheets without increasing their borrowing.

The piece continues with some of the potential downsides of doing so. Link here if you want to check it out.

China’s ‘shortcut to supporting real estate’

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