(Yicai Global) May 10 -- Mortgage rates in China are on a downward trajectory as Chinese cities continue to loosen house purchasing restrictions in order to boost a stagnant real estate market.

Some 83 cities adjusted the lower limits of their mortgage rates for first-time home buyers at the end of March and almost half of the cities set the rate at under 4 percent, according to figures from the People’s Bank of China.

The average borrowing rate for first-time home buyers was 4.01 percent in April, a decline of 116 basis points from a year ago and a dip of 1 bp from March, according to think tank Beike Research Institute’s study of 100 cities. While the average for second-time house purchasers was 4.91 percent, a drop of 54 bps from a year earlier.

Mortgage rates for first-time buyers in second-tier cities dipped by 1 bp in April from March to 3.98 percent, according to Beike Research Institute data. And that in the smaller third- and fourth-tier cities sank 2 bps to 3.99 percent. But the mortgage rate in the biggest first-tier cities remained unchanged.

And banks are now issuing personal housing loans at the fastest rate since 2019. Lenders were spending around 21 days in April to review a mortgage application, the same as in March, according to data from 100 cities studied by think tank Beike Research Institute.

A mortgage can be issued as soon as two weeks after the application is received if all the documents are in order, a customer manager at a large state-owned bank said.

And many cities, such as Hangzhou in eastern Zhejiang province and Hefei in eastern Anhui province, are lowering the bar to allow more people to qualify for housing provident fund loans, whose interest rates are lower than that of personal housing loans issued by banks.

Earlier this month, Shanghai, Suzhou in eastern Jiangsu province and other major cities raised the quota of families with more than one child who qualify for a housing provident loan. And some cities are subsidizing people who have just transferred their household registration to the city to buy their first homes in the municipality.

In the second quarter, local governments will hopefully continue to ease curbs on house purchases to encourage more people to buy residential properties, said Ma Hong, a senior researcher at Zhixin Investment Research Institute.

Playing a Waiting Game

But still people are holding a ‘wait-and-see’ attitude, an executive in charge of strategy at a large Guangdong-based property developer said. Sales at a residential project developed by his company are still falling despite a slight uptick in the beginning of March.

“Although some clients are worried that mortgage rates might start to rise again, some are still waiting for them to come down,” a customer manager working at a Dongguan-based bank’s housing loan department said to Yicai Global.

This is a far cry from the days of an overheated housing market, when local governments were rolling out restrictions to limit the number of properties that residents in the city could buy and to make it more difficult for non-residents to purchase.

Now that the property bubble has burst, the mortgage rate is no longer a decisive factor when people consider buying a home, the developer said. Rather, the location of the property, and whether it is in a prime area of town, is the key priority.

Editors：Tang Shihua, Kim Taylor