China's central bank cut the rate on a key lending facility and rolled out interest subsidies for first-time homebuyers on Tuesday. The measures follow a cabinet pledge to step up support for a slowing economy, with additional relending quotas opened up for technology, small business, and private-sector borrowers.
The People's Bank of China lowered the one-year rate on its pledged supplementary lending facility by 25 basis points, to 1.5% from 1.75%, the bank said in a statement. The cut is the latest step after the cabinet pledged to step up counter-cyclical policy support to address rising economic strains.
Central bank widens lending quotas
The PBOC also broadened its pledged supplementary lending facility to back investment in water, power-grid, computing, communications, urban pipeline, and logistics networks. It raised the quota for its sci-tech innovation and technological upgrading relending facility by 200 billion yuan ($29.84 billion), to 1.4 trillion yuan.
It lifted its relending quota for farm and small businesses by 500 billion yuan, to 4.85 trillion yuan. The central bank further increased its relending quota for private enterprises by 300 billion yuan, to 1.3 trillion yuan, and said it would maintain ample liquidity and guide interest rates to levels that support the real economy.
Mortgage subsidies target first-time buyers
China will subsidize interest payments on new commercial mortgages for eligible first-time homebuyers nationwide from October 1, the central bank and a financial regulator said. The government will provide an annual interest subsidy of 1 percentage point for up to five years on qualifying loans, with the subsidized portion capped at 1 million yuan per household, a finance ministry statement showed.
Eligible homes must have a floor area of no more than 120 square metres and a purchase price of no more than 1.5 million yuan per household.
Source: Economy News
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