Unprecedented measures to provide relief to owners
From 25 Octoberwill the main Chinese banks lower interest rate for existing mortgagesan expected move aimed at reducing the pressure on millions of home owners in the country.
This decision follows a request from Chinese central bankformulated with the aim of supporting the struggling real estate sector. Larger banks such as Bank of China And China Construction Bank has already announced that adjustments will be made automatically without requiring any action from customers.
Targeted support for real estate
However, this interest rate drop will not apply to all regions. Some cities may suffer Beijing, Shanghai And Shenzhen will see their mortgage interest saved by this measure.
For other eligible property loans, adjustments will be made gradually with a direct impact on heavily indebted households. This initiative is part of a series of recovery measures which China has adopted since the end of the Covid-19 pandemic, in the face of an economy struggling to get back on track.
A massive recovery plan with 300 billion euros in special bonds
During a press conference in Beijing China’s Finance Minister Lan Fo’anannounced the issue of special bonds for a colossal amount of 300 billion euros.
By the end of 2024, approx 2.3 trillion yuan (or almost âŹ300 billion) will be made available to support investment and economic recovery. These funds aim to strengthen sectors in difficulty, especially real estate, which are facing a protracted debt crisis.
An economy under pressure
Since the lifting of the strict anti-Covid measures in December 2022, the world’s second largest economy has faced several major challenges: low consumptiona mortgage crisisand one high youth unemployment.
The government is therefore seeking to remedy the situation with more flexible policies and increased support for the local authorities.
Increasing the local debt ceiling
In this same logic of relaunch, Lan Fo’an announced a increase in municipal debt ceiling.
The aim is to enable local communities to have additional resources to finance essential projects and address risks associated with debt. This initiative aims to improve the financial stability of regions that are often suffocated by their debts.
SoWith this drop in mortgage rates and a massive injection of capital via special bonds, China is making significant efforts to revive a weakened economy. However, the effectiveness of these measures in the face of structural challenges remains to be observed in the coming months.
