China is considering cutting interest rates on as much as US$5.3 trillion (S$6.9 trillion) of mortgages in two steps to lower borrowing costs for millions of families while mitigating the profit squeeze on its banking system.
Financial regulators have proposed reducing rates on outstanding mortgages nationwide by a total of about 80 basis points, part of a package that includes an accelerated timeline for when mortgages become eligible for refinancing, according to people familiar with the matter.
The first cut may come in the next few weeks, while the second move would take effect at the beginning of 2025, said the people.
The yet-to-be-finalised plan is likely to apply to first and second homes, pending approval from the top leadership, two of the people said. In China, regulators set benchmarks for mortgage rates that are followed closely by banks.
The National Financial Regulatory Administration did not respond to a request for comment.
China's real estate crisis is now extending into its fourth year with no signs of letting up. The sector continues to drag on the world's second-largest economy with the fallout spilling over to everything from the job market to consumption and household wealth.
This story is from the September 06, 2024 edition of The Straits Times.
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This story is from the September 06, 2024 edition of The Straits Times.
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