Chinese Cities Reduce Home Loan Deposit Requirement to 20%

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An increasing number of cities around China have reduced home loan deposit requirements, amidst efforts to keep the property sector afloat following the Evergrande Group debt debacle.

The Shandong province city of Heze recently announced that it would reduce the official home loan deposit requirement to 20%.

The move from Heze arrives after the launch of similar loosening in the central Chinese metropolis of Chongqing, as well as the city of Ganzhou in Jiangxi province.

Domestic analysts say the reduction of the home loan deposit requirement is major departure from precedent, with local authorities usually confined to making adjustments to mortgage rates.

“A reduction of the home loan deposit rate is a substantive policy for encouraging the property market and spurring market transactions,” said one source to state-owned media.

“Subsequently a greater number of cities will introduce measures to reduce home loan deposit rates, in particular third and fourth-tier cities, while it’s also entirely possible that first and second-tier cities will follow suit.

“In future, as real estate policies are further loosened, we expect that the market will hit a bottom and stabilise.”

A report from Securities Daily also found that more than 40 cities around China have launched various policies to loosen restrictions on the real estate sector since the start of 2022.