China News Service, January 5th. According to news from the central bank on the 5th, the People's Bank of China and the China Banking and Insurance Regulatory Commission recently issued a notice deciding to establish the first set of dynamic adjustment mechanism for housing loan interest rate policy.

Cities where the sales prices of newly-built commercial housing have declined for three consecutive months month-on-month and year-on-year may maintain, lower or cancel the lower limit of the local first-home mortgage interest rate policy in stages.

  The housing loan interest rate policy is linked to the trend of new housing prices and dynamically adjusted, which is conducive to supporting the city government to scientifically assess the changes in the sales price of local commercial housing. Form a long-term mechanism to support the stable and healthy operation of the real estate market.

  The Notice of the People's Bank of China and the China Banking and Insurance Regulatory Commission on Establishing a Long-term Mechanism for Dynamic Adjustment of the Interest Rate Policy of Personal Housing Loans for Newly Issuing the First Set of Housing stated that "The People's Bank of China and the China Banking and Insurance Regulatory Commission's Notice on Periodically Adjusting Differentiated Housing Credit Policies Since the release of the "Notice", it has played a positive role in supporting urban governments in various cities to implement policies and make good use of the policy toolbox, better support rigid housing demand, and promote the stable and healthy development of the real estate market.

According to the deployment of the State Council, the People's Bank of China and the China Banking and Insurance Regulatory Commission decided to establish a long-term mechanism for dynamic adjustment of the interest rate policy of commercial personal housing loans for newly issued first homes on the basis of phased adjustments to differentiated housing credit policies.

The relevant matters are hereby notified as follows:

  1. Starting from the fourth quarter of 2022, the municipal governments may conduct dynamic assessments of changes in the sales prices of new local commercial housing at the end of each quarter, from the end of the previous quarter to the second month of this quarter.

  2. For cities where the sales price of newly-built commercial housing during the evaluation period has declined for three consecutive months month-on-month and year-on-year, the lower limit of the interest rate on first-home commercial personal housing loans will be gradually relaxed.

According to the principle of city-specific policies, local governments can independently decide to maintain, lower or cancel the lower limit of local first-home commercial personal housing loan interest rates in stages starting from the next quarter.

Branches of the People's Bank of China and agencies dispatched by the China Banking and Insurance Regulatory Commission shall guide the implementation of the provincial-level market interest rate pricing self-regulatory mechanism.

  3. For cities that adopt a phased reduction or cancellation of the lower limit of the local first-home commercial personal housing loan interest rate, if the sales price of new commercial housing in the subsequent evaluation period has risen for three consecutive months month-on-month and year-on-year, it shall start from the next quarter. Restore the implementation of the national unified lower limit on the interest rate of commercial personal housing loans for the first home.

  4. Other circumstances and the lower limit of the interest rate policy for second-home commercial personal housing loans shall be implemented in accordance with current regulations.

(China New Finance and Economics)

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