(Bloomberg) -- Beijing and Shanghai lowered mortgage requirements for some homebuyers following guidance from the central government, loosening barriers for property ownership in some of country's most prized locations.
Both megacities will no longer disqualify people who've previously had a mortgage — even if fully repaid — from being considered first-time homebuyers, as long as they don't own presently own property, according to separate statements from the city governments. That would make such buyers eligible for smaller downpayment requirements and lower mortgage rates.
The cities' announcements follow new leeway from the central government that allows local officials to execute such policies, in a bid to revive demand from homebuyers that was shattered by the two-year property crisis. Guangzhou and Shenzhen took similar steps and downpayments were cut nationwide.
“The recent easing since last week has exceeded expectations,” Betty Wang, senior economist at Australia & New Zealand Banking Group, said before the announcements in Beijing and Shanghai.
China's home sales are slumping, and Country Garden Holdings Co. is on the brink of a default. Risks are spreading to the country's $60 trillion financial system. So far officials have refrained from resorting to a large-scale bailout for the industry, spurring concerns about the economy and putting the government's 5% growth target at risk.
--With assistance from Evelyn Yu.
(Updates with more details)
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