Major Breaking News in the Real Estate Market! Understand all key points in one article

According to a report from Xinhua News Agency in Hong Kong, on September 29th, several positive news about the real estate market emerged. The People's Bank of China and the China Banking and Insurance Regulatory Commission introduced multiple financial support policies for the real estate sector.

1. The central bank issued a notice to improve the pricing mechanism of commercial individual housing loans, specifying that starting from November 1st, eligible borrowers can negotiate with commercial banks to adjust the interest rate markup for housing loans while also negotiating the reset period. At the same time, the central bank guided the market interest rate pricing self-discipline mechanism to release the "Initiative on Bulk Adjustment of Existing Housing Loan Rates," specifying that commercial banks should generally implement bulk adjustments to existing housing loan rates (including first homes, second homes, and above) by October 31, 2024.

2. The central bank and the China Banking and Insurance Regulatory Commission issued a notice on optimizing the minimum down payment ratio policy for individual housing loans, clarifying that for resident families purchasing homes with loans, commercial individual housing loans no longer distinguish between first homes and second homes, with the minimum down payment ratio unified at not less than 15%.

3. The central bank issued a notice regarding the requirements for optimizing re-loans for affordable housing. For qualified loans issued by financial institutions, the central bank increased the ratio of re-loans provided to financial institutions from 60% of the loan principal to 100%.

4. The central bank and the China Banking and Insurance Regulatory Commission issued a notice to extend the deadlines for some real estate financial policies.

After the policy announcement, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications quickly issued announcements regarding the bulk adjustment of existing housing loans. Shanghai and Shenzhen also announced adjustments to housing purchase restrictions, including lowering the minimum down payment ratio for commercial individual housing loans for first homes to not less than 15%.

Central bank improves commercial loan interest rate pricing mechanism

On September 29th, the central bank issued a notice to improve the pricing mechanism of commercial individual housing loans, specifying that starting from November 1, 2024, eligible borrowers can negotiate with commercial banks to adjust the interest rate markup for housing loans while also negotiating the reset period.

The central bank guided the market interest rate pricing self-discipline mechanism to release the "Initiative on Bulk Adjustment of Existing Housing Loan Rates," specifying that commercial banks should generally implement bulk adjustments to existing housing loan rates (including first homes, second homes, and above) by October 31, 2024.

Regarding questions about improving the pricing mechanism of commercial individual housing loans, a relevant official from the People's Bank of China stated that the market interest rate pricing self-discipline mechanism will issue an initiative to guide commercial banks to conduct a bulk adjustment of existing housing loan rates by October 31, 2024. Commercial banks will release relevant announcements and detailed rules for bulk adjustments, uniformly reduce the markup on housing loan rates based on the LPR, and provide convenience to borrowers as much as possible. The majority of borrowers can complete the "one-click operation" through online banking, mobile banking, and other channels without the need to visit a commercial bank branch. Please pay attention to the relevant information released by the lending commercial banks on their official platforms in a timely manner. After the bulk adjustment is completed, both borrowers and lenders can autonomously negotiate and dynamically adjust existing housing loan rates based on market principles, in accordance with the People's Bank of China Announcement No. 11 of 2024After the announcement by the central bank, Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), China Construction Bank (CCB), Bank of China (BOC), and Bank of Communications (BOCOM) quickly issued announcements regarding the bulk adjustment of existing housing loans.

CCB announced that it is urgently formulating a plan for bulk adjustment of existing housing loan interest rates, planning to release specific operational details on October 12, 2024, and complete the bulk adjustment by October 31, 2024.

ICBC announced that it is orderly advancing the adjustment of existing housing loan interest rates, planning to announce specific operational guidelines and related matters on October 12, 2024, and complete the bulk adjustment of existing housing loan rates by October 31, 2024.

BOC stated that it plans to release specific implementation details on October 12, 2024, and complete the bulk adjustment of existing housing loan rates by October 31, 2024.

ABC will announce specific operational matters on October 12 and uniformly implement bulk adjustments to commercial individual housing loan rates before October 31.

Bank of Communications announced that it is preparing for the orderly adjustment of commercial individual housing loan rates. It will provide efficient and convenient multi-channel services, organize implementation in accordance with laws and regulations, and plans to announce specific operational matters on October 12, 2024, and uniformly implement bulk adjustments to commercial individual housing loan rates before October 31, 2024.

Minimum Down Payment Ratio for Housing Loans Reduced

On September 29, the central bank and the China Banking and Insurance Regulatory Commission issued a notice optimizing the policy of the minimum down payment ratio for personal housing loans. For resident families purchasing homes with loans, the minimum down payment ratio for commercial individual housing loans is now unified at no less than 15%, without distinguishing between first and second homes.

Extension of Some Real Estate Financial Policy Deadlines

On September 29, 2024, the People's Bank of China and the China Banking and Insurance Regulatory Commission issued a notice regarding the extension of deadlines for some real estate financial policiesPeople's Bank of China adjusts and optimizes re-lending for affordable housing

On September 29th, the official website of the People's Bank of China announced that in order to support local state-owned enterprises in acquiring completed but unsold commercial housing for use as affordable housing at a reasonable price, and to further enhance market incentives for financial institutions and acquiring entities, the People's Bank of China has decided to adjust and optimize relevant matters regarding re-lending for affordable housing. For eligible loans issued by financial institutions, the People's Bank of China will increase the proportion of re-lending from 60% of the loan principal to 100%.

For any policies inconsistent with this notice, this notice shall prevail. Other elements, operational procedures, and work requirements for re-lending for affordable housing will continue to follow the relevant provisions of the "Notice of the People's Bank of China on the Establishment of Re-lending for Affordable Housing" (YinFa [2024] No. 110) and the "Notice of the People's Bank of China and China Banking and Insurance Regulatory Commission on Implementing Re-lending for Affordable Housing" (YinFa [2024] No. 135).

Shanghai and Shenzhen adjust real estate policies

On September 29th, the Shanghai Housing and Urban-Rural Development Administration issued a document stating that Shanghai will adjust its housing purchase restrictions policy, with the main points as follows:

1. For non-local household residents and single individuals purchasing housing outside the outer ring road, the required years of social insurance or personal income tax payment before the purchase will be adjusted to a continuous payment of 1 year or more prior to the purchase date.

2. Non-local household residents holding the "Shanghai Residence Permit" with accumulated points meeting the standard value, and having paid social insurance or personal income tax in the city for 3 years or more, will enjoy the same housing purchase treatment as Shanghai residents in terms of the number of housing units purchased.

3. Implementing more differentiated housing purchase policies in the Lin-gang New Area of the Free Trade Zone, allowing groups working in the new area with a separation of work and residence to purchase an additional housing unit on top of the existing housing purchase restrictions, promoting a balance between work and residence.

In optimizing housing credit policies:

1. Implementing the national policy of reducing interest rates on existing housing loans, guiding commercial banks to gradually and orderly reduce interest rates on existing housing loans to levels close to those of new loans, further reducing the interest expenses of homebuyers.

2. Adjusting the minimum down payment ratio for commercial individual housing loans for the first home to not less than 15%. For the second home, the minimum down payment ratio for commercial individual housing loans is adjusted to not less than 25%; the minimum down payment ratio for the second home loans in regions with differentiated policies is adjusted to not less than 20%. The corresponding minimum down payment ratio for second home loans using housing provident funds is also adjusted.

In adjusting housing tax policies:

1. Adjusting the exemption period for value-added tax, reducing the exemption period for individuals selling housing to 2 years from the previous 5 years.

2. In accordance with national directives, promptly abolishing the standards for ordinary and non-ordinary housing, reducing housing transaction costs, and better meeting residents' demands for improving housing conditions.

The above notice will be implemented from October 1, 2024.

On September 29th, the Shenzhen Housing and Construction Bureau and other departments issued a document stating that the minimum down payment ratio for commercial individual housing loans for the first home is adjusted to 15%, and for the second home, it is adjusted to 20%. In the Shenshan Special Cooperation Zone, the minimum down payment ratio for commercial individual housing loans for the first and second homes is uniformly adjusted to 15%, and the lower limit on interest rates is removedThe main content is as follows:

I. Optimization of Housing Purchase Restrictions in Different Districts

(1) Local households (including households with some members holding local household registration, the same below) are restricted to purchasing 2 residential properties, while local single adults (including divorced individuals, the same below) are restricted to purchasing 1 residential property. In addition to the above housing purchase restrictions, within the areas of Yantian District, Bao'an District (excluding Xin'an Street and Xixiang Street), Longgang District, Longhua District, Pingshan District, Guangming District, and Dapeng New District, an additional residential property can be purchased.

(2) Non-local households and adult singles are restricted to purchasing 1 residential property. For purchasing properties in Futian District, Luohu District, Nanshan District, Xin'an Street in Bao'an District, and Xixiang Street, proof of continuous payment of personal income tax or social insurance in the city for the previous year before the purchase date is required. For purchasing properties in Yantian District, Bao'an District (excluding Xin'an Street and Xixiang Street), Longgang District, Longhua District, Pingshan District, Guangming District, and Dapeng New District, no proof of personal income tax or social insurance is required.

Non-local households with two or more underage children can purchase an additional residential property on top of the above housing purchase restrictions.

(3) The Shenzhen-Shanwei Special Cooperation Zone will follow its current policies.

II. Removal of Transfer Restrictions on Commercial Residential Properties and Serviced Apartments

After obtaining the real estate ownership certificate, commercial residential properties and serviced apartments can be listed for trading.

III. Streamlining the Price Filing Process for Commercial Residential Properties and Serviced Apartments

Real estate development enterprises can independently and reasonably determine the selling prices of commercial residential properties and serviced apartments, and report them to the market supervision department while copying the district-level housing construction department. For commercial residential projects that acquire residential land through bidding or auction, the original agreements will be followed.

IV. Adjustment of the Exemption Period for Personal Housing Transfer Value-Added Tax

The exemption period for personal housing transfer value-added tax is adjusted from 5 years to 2 years.

V. Optimization of Personal Housing Loan Policies

(1) The minimum down payment ratio for commercial personal housing loans for the first property is adjusted to 15%, and for the second property, it is adjusted to 20%.

(2) For resident households or adult singles who own a property without a mortgage or only have one property with a mortgage (including mortgage contract registration information), when purchasing a new property, the policy for the second property loan can be applied when processing personal housing loan transactions.

(3) Resident households with two or more underage children purchasing a second property can apply the policy for the first property loan when processing personal housing loan transactions.

(4) In the Shenzhen-Shanwei Special Cooperation Zone, the minimum down payment ratio for the first and second commercial personal housing loans is uniformly adjusted to 15%, with the removal of the lower limit on interest rates.

VI. Accelerating the Establishment of a New Real Estate Development Model

Improving the "market + guarantee" housing supply system, promoting the establishment of a new mechanism for "people, houses, land, and money" linkage, and accelerating the establishment of a new real estate development model. Combining the turnover cycle of commercial residential properties, the stock of residential land, optimizing and adjusting the scale, layout, and structure of residential land. Initiating pilot sales of existing properties, gradually increasing the proportion of existing property sales for new supply land, and orderly advancing sales system reforms. Fully leveraging the role of the urban real estate financing coordination mechanism, impartially meeting the reasonable financing needs of different ownership real estate enterprises. This notice will be effective from October 1, 2024. In case of any inconsistency with previous policies, this notice shall prevailSource: Wind