New Chinese mortgage rules to support the property market

China Central Bank has recently released a policy which reduced the minimum down payment for the first time home buyers from 30% to 25% of the purchase price. However, this policy mainly applies to tier-two and tier-three cities, which could help to boost the demand of the property market.

China implemented the 30% down payment requirement back in 2010 in an effort to curb the speculative prices of properties. The government has achieved some success in its efforts though the initiative also result a large pool of surplus properties in the country today.

Commodity Inside understands that the policy of reducing the down-payment for first-time home buyers could reduce buyers’ financial burden and encourage them to purchase properties. This is also a positive sign for property developers and is expected to stimulate the housing construction market.

Property market plays an important role in a country’s economy which directly impact machinery, electronics, steel, white goods, furniture, and other related sectors. This new released policy could also be a government strategy to revive property investment thus the country’s economy. That also could be the reason that Chinese government has urged some cities to allow citizens to borrow more from housing funds to help buyers.