BEIJING, Oct. 25 (Xinhua) -- China's major national commercial banks have started to implement the mortgage rate adjustment plans announced earlier this month to bolster confidence in the property sector, which is showing recovering momentum amid a raft of favorable policies.

 

The mortgage rates for first homes, second homes and more have been reduced to 30 basis points below the loan prime rate, according to the statements published on the banking apps.

 

This reduction, affecting over 90 percent of existing mortgage loans, is expected to save borrowers 150 billion yuan (about 21.1 billion U.S. dollars) and benefit 50 million households, said Tao Ling, deputy governor of the People's Bank of China (PBOC).

 

The fresh move came after the central bank requested commercial banks to lower mortgage rates for existing home loans at the end of September. Alongside this, the PBOC announced a reduction in the minimum down payment ratio for individuals' commercial housing mortgages to no less than 15 percent for both first- and second-home purchases.

 

By addressing the issue of relatively high mortgage rates for existing homes, especially amid slower residential income growth, the adjustment is expected to ease the burden on borrowers and increase their disposable income. This, in turn, will bolster confidence in the consumption sector, according to industry experts.

 

Following a combination of policy support aimed at stabilizing the property market, ranging from the central bank's fine-tuning of monetary policies to local governments' relaxation of home purchase restrictions to varying degrees, the sector has shown signs of recovery and contributed to the country's economic growth.

 

Since October, most Chinese cities have seen a significant warm-up in their real estate markets. There has been an increase in visits to new property projects and a rise in subscription agreements signed by visitors, according to Xu Yuejin, an analyst with the China Index Academy.

 

In first-tier cities such as Beijing, where favorable housing purchase policies continue to be optimized, the turnover of both new and second-hand homes has increased notably. Xu predicts significant growth in real estate market sales data for October as the policies continue to take effect.

 

On Monday, China cut its market-based benchmark lending rates for the third time in the year, with the one-year loan prime rate (LPR) down to 3.1 percent from the previous 3.35 percent. The over-five-year LPR, on which many lenders base their mortgage rates, was lowered to 3.6 percent from 3.85 percent, according to the National Interbank Funding Center.

 

The greater-than-expected LPR declines reflect the government's fourth-quarter focus on guiding substantial reductions in corporate and household loan rates -- particularly concerning new residential mortgages, noted Wang Qing, chief economist at Golden Credit Rating, a credit rating agency based in China.

 

This will help further meet the financing needs in the real economy, promote consumption, and expand investment, Wang said. It is also conducive to reversing the downturn and stabilizing the real estate market, providing key support for the country to achieve its full-year economic growth target.

 

"Regulated by a series of policies, China's real estate market has started bottoming out after three years of adjustment," Minister of Housing and Urban-Rural Development Ni Hong told a press conference earlier this month.

 

In the next step, China will implement a mix of policies, including existing ones and fresh supportive measures, so that people can enjoy the policy dividends, Ni said.

 

The fresh policies include strengthened support for urban village and dilapidated housing renovation projects. China plans to renovate an additional 1 million such housing units with measures such as providing monetary compensation to residents, according to the minister.

 

Additionally, all eligible real estate projects will be included in the "white list" mechanism and that their reasonable financing needs will be met through loans. It is expected that by the end of this year, the approved loan amount for the "white list" projects will surpass 4 trillion yuan, said Xiao Yuanqi, deputy head of the National Financial Regulatory Administration.