The interest rate for home mortgages in China declined in the first quarter of 2019 in a sign that easier credit policy has fed through to the housing market.
The weighted average rate for individual home loans dropped to 5.68% in March, down slightly from December 2018, according to the People’s Bank of China’s quarterly policy report released late Friday. The last decline was in the third quarter of 2016.
The moderation is in line with the central bank’s attempts to provide easier credit to certain sectors of the economy to prevent a sharp slowdown. The targeted actions are stimulating demand, with investment growth in real-estate development rising at the fastest pace since 2014 in the first four months of the year. That will in turn boost demand for products such as glass, cement, steel, white goods and other home appliances.
“Property-related credit has been growing steadily, and the Chinese economy continues to have a relatively heavy reliance on property and infrastructure investment” especially when manufacturing and private investment growth are slowing, said Wang Yifeng, chief banking analyst at Everbright Securities Co. in Shanghai.
More Chinese cities have seen rising home prices in the first three months of this year compared with late 2018, the PBOC’s report said. New home prices also accelerated in April, although the government recently told a number of cities to make sure that prices don’t rise too quickly.
In the politburo meeting last month, authorities repeated that they don’t want a speculative home market, while also hinting that they will give local authorities more autonomy on setting city-specific property policies.