China fires policy bazooka to boost economy, led by mortgage-rate cut, property measures
Rate cut, support to the acquisition of real estate companies’ land banks and new tools to boost capital markets among measures rolled out on Tuesday
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China announces mortgage rate cut as part of new measures to boost economy
China announced a suite of new heavyweight policies to boost the economy on Tuesday, including cuts to the mortgage rate for existing housing and its reserve requirement ratio, while it also planned to roll-out new tools to support the stock market.
The reserve requirement ratio (RRR) – the amount of cash that commercial banks must hold as reserves – and the mortgage rate for existing housing would be cut by half a percentage point, according to People’s Bank of China governor Pan Gongsheng.
The PBOC would also support the acquisition of real estate companies’ lands by studying measures to allow policy and commercial banks to grant loans to eligible companies to acquire the land, revitalise the stock of the land and ease the financial pressure on real estate enterprises.
If necessary, the central bank may provide policy support, Pan added.
“The reduction in existing mortgage interest rates is expected to benefit 50 million households or 150 million people, reducing household interest expenses by an average of about 150 billion yuan per year, which will efficiently boost consumption and investment,” Pan said during a joint press conference alongside Li Yunze, minister of the National Administration of Financial Regulation, and Wu Qing, chairman of the China Securities Regulatory Commission (CSRC).
The Hang Seng Index in Hong Kong responded to the announcements by posting its biggest gain since March 2023, rising by 4.1 per cent at the close to 19,000.56 on Tuesday.
