State Media Highlights First Home Loan Rate Falls Following Reserve Ratio Cut

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Chinese state media is drawing attention to the increased room for downward adjustments to first home loan rates following the central bank’s unveiling of further cuts to the required reserve ratio.

In the first week of 2019 the People’s Bank of China (PBOC) announced a reduction in the required reserve ratio for financial institutions of one percentage point, comprised of two 0.5 percentage point cuts scheduled for 15 January and 25 January.

A report from the state-owned Securities Daily which was highlighted by the finance section of the People’s Daily points out that reserve cuts by the central bank have historically always been favourable for property markets.

Zhang Dawei, chief analyst with Centaline Property. said to Securities Daily that while the required reserve ratio cuts are “targeted” at small and micro enterprises and private enterprises, there can be no denying that the real estate sector will also be a beneficiary.

“For the property sector, a required reserve cut will definitely be able to ease funding pressure on real estate companies,”  said Zhang. “Additionally, homebuyers will also be able to obtain more stable prices for their mortgages.”

Zhang previously told domestic media that he expects at least 30 Chinese cities to loosen the local real estate controls that were first launched at the start of 2017 in a bid to cool down overheating urban property markets.

Zhang Bo (张波), chief analyst with 58 Anjuke, said to Securities Daily that Chinese authorities have indicated they will still maintain the principle of the “Three No Changes” following the reserve cut – referring to no change in the direction of stable monetary policy, no change in the direction of targeted controls favouring small and micro and private enterprises, and no change to the overall theme of tight housing market controls.

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