China’s PBOC Extends Mortgage-Rate Easing to Revive Property Market – MarketWatch

China’s central bank said Thursday that it would continue to let local governments lower or remove the floor of mortgage rates for first-home buyers if local home prices recorded persistent declines, in a bid to revive the country’s property market.

The People’s Bank of China said cities where home prices report on-month and on-year falls for three months in a row can lower or remove its mandated floor of mortgage rates for local first-home buyers.

Local governments should release evaluations of home prices to determine whether they would continue the policy, the central bank said. Cities which later report home price increases for three straight months should implement nationwide mortgage rate policy, the PBOC said.

China’s central bank introduced a similar policy in September to stimulate market demand for homes and said then that the easing would only take effect in 2022.

The latest extension of the easing policy showed Beijing’s continued efforts to arrest prolonged property slump that weighed down on the Chinese economy. Due to the protracted property downturn and the stringent Covid-19 controls, the Chinese economy is set to miss its growth target of around 5.5% in 2022 and economists widely expected the economy to have expanded less than 3%.

With Beijing abruptly ending its zero-Covid strategy last month, more efforts will be made to stabilize the real-estate market in 2023, economists say.

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