BEIJING (Reuters) – China’s capital city Beijing announced steps on Wednesday to reduce the cost of buying a home, including cutting mortgage interest rates and the minimum down-payment ratio, to try to boost the local property market.
The moves, announced in a local government statement, come after the central bank issued new guidelines on reducing minimum mortgage rates and down-payments last month, which sparked dozens of cities to relax property policies.
Beijing is lowering the minimum down-payment ratio for buying a home to 20% from 30%, and for some second home buyers to 35% from 40%, the statement said.
The city is also reducing the floor rate for a first-home mortgage to the loan prime rate (LPR) minus 45 basis points. Previously, the floor was the LPR plus 10 basis points.
Beijing’s moves mean that China’s four biggest cities have now relaxed mortgage and other policies that should help boost demand from home buyers, said analyst Yan Yuejin at E-House China Research and Development Institution.
China’s ailing property market has been a big drag on the world’s second-largest economy.