Chinese cities reduce housing provident fund loan interest rates

Several major cities in China, including Beijing, Shanghai, Guangzhou and Shenzhen, on Thursday reduced personal housing provident fund loan interest rates by 0.25 percentage points, effective immediately. This move is part of a broader effort to support the housing market and ease the financial burden on homebuyers, an analyst said.

The Beijing Housing Fund Management Center announced on Thursday that for new loans issued on or after May 8, the interest rate for first-time homebuyers on loans of up to and including five years will be 2.1 percent, down from 2.35 percent, while that for more than five years will be 2.6 percent, down from 2.85 percent.

For second-home buyers, the rates will be 2.525 percent for loans of up to and including five years and 3.075 percent for loans exceeding five years. For loans issued before May 8, 2025, with a term of one year or less, the original rates will continue to apply without segmentation. For loans with a term exceeding one year, the original rates will remain in effect until January 1, 2026, when the adjusted rates will come into force.

Other first-tier cities such as Shanghai, Guangzhou and Shenzhen in South China's Guangdong Province have followed suit.

Other regions, including the provinces of Sichuan, Anhui, Hainan and the cities of Chongqing, Changsha and Shijiazhuang, also announced the adjustment of housing provident fund loan rates effective on Thursday.

On Wednesday, the People's Bank of China (PBC), the central bank, announced that it would lower the interest rates on personal housing provident fund loans by 0.25 percentage points starting on Thursday.

The adjustments are expected to save homebuyers 20 billion yuan ($2.8 billion) in interest payments annually, said Pan Gongsheng, governor of the PBC, on Wednesday. Pan emphasized that the adjustment aims to support the inelastic housing needs of residents and help stabilize the real estate market.

The new measures will have a positive impact on the real estate sector and play an important role in continuously stabilizing the market, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Thursday.

Yan suggested that there could be further easing of personal mortgage loan policies. The adjustment is seen as a significant step in consolidating the stability of the real estate market and promoting housing consumption, in line with the broader goal of financial support for home purchases.

In addition, the reduction in personal housing provident fund loan rates is in line with expectations and better leverages the people-oriented and consumption-supporting functions of housing provident fund loans. The impetus for "financial support for housing consumption" is very strong and will continue to drive housing consumption work in the second quarter, Yan noted.

In March, home prices rose in more cities compared with the previous month, as real estate transactions picked up, according to data from the National Bureau of Statistics.

The figures added to growing evidence that the real estate sector is stabilizing, thanks to the government's stimulus policies announced in recent months aimed at supporting developers and boosting market sentiment, according to the Xinhua News Agency.