BEIJING: Six of China's biggest banks said they would tweak interest rates on mortgages for existing home loans following a request to lower them from Beijing's central bank, state media said Monday, as the country seeks to pull itself out of a housing slump.
The measures are the latest in a raft of pledges out of Beijing since last week aimed at kickstarting the world's number-two economy.
The teetering property sector has long accounted for around a quarter of gross domestic product and experienced dazzling growth for two decades.
But a years-long housing slump has become a major impediment to growth as the country's leadership eyes a target of around five percent this year – an objective analysts say is optimistic given the many headwinds the economy faces.
On Monday, state news agency Xinhua said that China's six major national commercial banks – including the Industrial and Commercial Bank of China, the Agricultural Bank of China and Bank of China – had agreed to "adjust" mortgage rates for existing home loans.
The move followed a request by Beijing's central bank that they lower the rates in a bid to reduce pressure on homeowners.
The rate adjustment will take place on October 31, Xinhua quoted the banks as saying.
Earlier on Monday, three of China's biggest cities said they would ease restrictions to make it easier for people to buy homes.
The southern megacities of Guangzhou and Shenzhen – home to a combined 37 million people – said prospective homebuyers would no longer be vetted for their eligibility.
In the centre of Guangzhou, where people were previously barred from owning more than two homes, there will no longer be any restrictions on how many a person can buy, the city said.
And in the eastern economic powerhouse of Shanghai – the country's richest city – authorities said they would lower the minimum down payments on a home to 15 percent from 20 percent starting on Tuesday.
Restrictions on people originally hailing from other parts of China on buying homes in the megacities will also be relaxed, the new rules said.
Yan Yuejin, deputy director of the E-house China R&D Institute in Shanghai, told AFP the moves were driven by "pressure" in the property market.
"Fewer people are buying property these days," he said.
Getting the property market moving again, Yan said, was key to boosting lagging domestic consumption – another major drag on growth.
China's leadership last week unveiled a host of measures to boost the economy in one of its biggest drives in years to jumpstart growth.
They also warned the economy was being plagued by "new problems."
Markets have rallied in Hong Kong and mainland China on the announcements amid hopes of greater support.
On Monday, property developers were among the big winners, with Kaisa shares rocketing almost 60 percent, Sunac up more than 16 percent and Fantasia piling on more than 30 percent.
However, analysts warned the "bazooka" stimulus was likely still not enough to boost the property market, and one was sceptical that Monday's new measures would do much to help.
"From a macro perspective these policies are not that important, as these cities account for a small share of the national property market," Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.
"The key policy to address the macro challenge remains... fiscal."
Highlighting the uphill task for the government, official data showed Monday that manufacturing contracted for a fifth consecutive month in September.
The Purchasing Managers' Index – a key barometer of industrial output – stood at 49.8 points, the National Bureau of Statistics announced.
Still, it represented a slight improvement from August's 49.1 points, and was above the 49.5 forecast in a survey by Bloomberg.
A figure above 50 indicates an expansion in manufacturing activity, while anything below that is a contraction.