(Beijing = Yonhap News) Correspondent Jong-gu Han = Starting next month, the Chinese government will subsidize a portion of the mortgage loan interest for households purchasing their first home.
The central government's direct interest subsidy for housing mortgage loans is interpreted as a measure to boost actual demand in the real estate market, which has been in a long-term recession.
China's Ministry of Finance, the People's Bank of China, and the State Administration of Financial Supervision announced in a joint notice on the 29th that they will provide interest support for new mortgage loans for first-time homebuying households that meet the conditions starting from the 1st of next month.
The government supports interest of 1% point per year for up to 5 years.
To receive support, the house being purchased must have a building area of โโ120 m2 or less and a price of 1.5 million yuan (approximately 300 million won) or less. This excludes cases where an existing mortgage loan is being converted to a new loan.
The characteristic of this measure is that instead of lowering the base interest rate or home mortgage loan interest rate, it directly lowers the interest burden of real consumers who do not own a home by investing government finances.
The upper limits on area and housing prices also appear to be aimed at the actual demand class who purchase small, medium-sized, and low-priced homes.
The Chinese real estate market is showing no clear signs of recovery despite the government's series of stimulus measures.
According to an announcement by China's National Bureau of Statistics on the 15th, real estate development investment from January to August this year decreased by 19.9% โโcompared to the same period last year, and the sales area of โโnew homes also decreased by 13.0%.
China's State Council also emphasized the need to revitalize the economy by expanding loans and boosting domestic demand at an executive meeting held the day before.
In particular, they called for promoting early construction of major infrastructure projects and strengthening interest support policies to expand investment and promote consumption.
On this day, the People's Bank of China also announced policy financial support measures to stimulate the economy.
First, it was decided to lower the interest rate on collateral-supplementary loans (PSL), which supplies long-term, low-interest funds to policy financial institutions, by 0.25 percentage points from 1.75% to 1.5%.
PSL support targets include water resources networks, new power networks, computing networks, next-generation communication networks, urban underground pipe networks, and logistics networks.
It was decided to increase the re-loan limit for science and technology innovation and technology modification by 200 billion yuan from 1.2 trillion yuan to 1.4 trillion yuan, and to increase the re-loan limit for agriculture and small and medium-sized enterprises by 500 billion yuan.
This measure is interpreted as a coordinated fiscal and monetary policy effort to support sluggish domestic demand and investment by lowering the burden of housing purchases on households in the real estate sector and expanding the supply of policy funds to businesses and infrastructure sectors.
The People's Bank of China said, "We will comprehensively utilize various monetary policy tools according to macroeconomic operations, price trends, etc.," and "We will support high-quality development of the real economy by maintaining sufficient liquidity and appropriately adjusting the interest rate level."
