The five major state-owned banks announced a reduction in interest rates for existing home loans, with detailed rules to be released on October 12th! New policies for the real estate market have also been announced in Shanghai and Guangzhou.

The People's Bank of China announced on September 29 that it will improve the pricing mechanism for commercial individual housing loans and allow existing housing loans that meet certain conditions to be re-negotiated for the margin, in order to reduce the interest rates on existing housing loans. A self-disciplinary market rate pricing mechanism initiative was also announced, with commercial banks expected to carry out bulk adjustments on existing housing loans that meet the conditions by October 31, 2024. For existing housing loans with margins higher than -30 basis points, they will be adjusted to not lower than -30 basis points and not lower than the lower limit of the margin for new housing loans currently in effect in the city (if applicable), bringing the rates closer to the national average for new housing loans, with an expected average decrease of about 0.5 percentage points. To adapt to the new changes in the supply and demand relationship in the real estate market, during the bulk adjustment and normalization stages, the distinction between first-time and second-time home buyers (except for cities with policies that have limits and distinctions for first-time and second-time buyers) will no longer be made. This will guide the interest rates for first-time and second-time existing housing loans to be lowered to near the national average for new housing loans, reducing the interest burden on existing housing loan borrowers. So, how much interest expense can home buyers save? For example, considering an existing housing loan of 1 million yuan with a term of 25 years and equal principal and interest repayment, if the interest rate decreases from 4.4% to 3.55%, the borrower can save about 5,600 yuan in interest expenses per year. After the bulk adjustment is completed, it is estimated that this policy will benefit 50 million households and 150 million people, saving a total of 150 billion yuan in annual expenses for existing housing loan households. The Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Construction Bank of China, and Bank of Communications have all announced their plans to implement the adjustments according to the self-disciplinary mechanism. In addition, Shanghai has announced seven new real estate policies to adjust purchase restrictions and lower down payment ratios. On the evening of September 29, Shanghai issued a notice on further optimizing the city's real estate market policies, including adjusting housing purchase restrictions, housing credit policies, and housing tax policies. This notice will come into effect on October 1, 2024. The optimization of housing purchase restrictions includes shortening the years of social security contribution required for non-local residents and single individuals purchasing homes outside the outer ring road, improving the treatment for residents holding Shanghai residence permits, and implementing a balanced approach to work and residence, with additional housing qualifications in the new port area.1) Implement national policies on reducing the interest rates of existing home loans, guide commercial banks to steadily and orderly reduce the interest rates of existing home loans to near the interest rates of new loans, further alleviating the burden of interest payments for home buyers. 2) The minimum down payment ratio for the first commercial individual housing loans is adjusted to no less than 15%. The minimum down payment ratio for the second commercial individual housing loans is adjusted to no less than 25%; the minimum down payment ratio for the second housing loans in differentiated policy areas is adjusted to no less than 20%. The minimum down payment ratio for the second housing loans using housing provident fund is adjusted accordingly.Yiju Research Institute found through calculations that for residential properties with total prices of 5 million and 10 million RMB, both types of buyers will experience a significant decrease in down payment and pressure. According to the notice, the exemption period for value-added tax has been shortened to support the demand for replacement and improvement of housing; the standard for regular housing has been cancelled to reduce transaction costs, including: 1. Adjusting the exemption period for value-added tax, the exemption period for individuals selling real estate to outsiders has been reduced from 5 years to 2 years. 2. In accordance with national directives, regular housing standards and non-regular housing standards have been promptly cancelled to reduce housing transaction costs and better meet residents' demand for improved housing. "This policy further focuses on the demand side, especially the diverse demand for improved residential housing by residents. Through adjustments and optimizations in various aspects such as housing finance, taxation, and purchase restrictions, multiple departments are taking comprehensive measures to meet the rational demand for housing and promote comfortable living," said Yan Yuejin. Guangzhou: Cancelling various purchase restrictions for residential homes for families On September 29, the Guangzhou Municipal People's Government Office issued a notice regarding adjustments to measures for the stable and healthy development of the real estate market. The notice clearly states the cancellation of various purchase restrictions for families purchasing homes in the city, and it will be officially implemented from September 30, 2024. The following is the original text of the notice: Notice from the Office of the Guangzhou Municipal People's Government on Adjusting Measures for the Stable and Healthy Development of the City's Real Estate Market To all district people's governments, departments and agencies directly under the City Government: In order to deeply implement the decisions and deployments of the Party Central Committee and the State Council, respond to public concerns, and promote the stable and healthy development of the real estate market, with the approval of the Guangzhou Municipal People's Government, various purchase restrictions for families purchasing homes in the city have been cancelled. This notice will be officially implemented from September 30, 2024. For policies conflicting with this notice, this notice shall prevail. Guangzhou Municipal People's Government Office September 29, 2024 On September 29, the Office of the Guangzhou Municipal People's Government issued the notice "Regarding Adjustments to Measures for the Stable and Healthy Development of the City's Real Estate Market" (Suifu Office Letter [2024] No. 65, hereinafter referred to as the "Notice"), the interpretation is as follows: 1. Adjusting housing purchase restrictions Previously, the city's notices "Office of the People's Government of Guangzhou City on Optimizing Policies for the Stable and Healthy Development of the City's Real Estate Market" (Suifu Office Letter [2023] No. 49), "Office of the People's Government of Guangzhou City on Further Optimizing Measures for the Stable and Healthy Development of the City's Real Estate Market" (Suifu Office Letter [2024] No. 6), and "Office of the People's Government of Guangzhou City on Further Promoting the Stable and Healthy Development of the City's Real Estate Market" (Suifu Office Letter [2024] No. 38) stipulated that Yuexiu, Haizhu, Liwan, Tianhe, Baiyun (excluding Jianggao Town, Taihe Town, Renhe Town, Zhongluotan Town), Nansha, and other areas are restricted areas for housing purchases. In these restricted areas, the purchase of residential buildings with a floor area above 120 square meters (excluding 120 square meters) is not restricted, while non-local residents and unmarried individuals who can provide proof of paying personal income tax or social insurance for the previous six months before purchasing are limited to the purchase of 2 and 1 units of housing (with a floor area of 120 square meters or less), respectively. Following this adjustment to the purchase restrictions, local residents, non-local residents, and unmarried individuals in the city will no longer be subject to qualification review or restrictions on the number of housing units they can purchase. 2. Implementation timeline The policy adjustment will be effective from 00:00 on September 30, 2024, and in case of inconsistencies with the "Notice", the notice shall prevail. This article is a reprint from the public account of "Daily Economic News," edited by GMTEight: Jiang Yuanhua.