(Yicai Global) Nov. 14 -- Hangzhou, the capital of China’s southeastern Zhejiang province, has relaxed its policy on home purchases in a bid to steady the city’s property market. The move represents the first change in the city’s housing policy in nearly five years.

Buyers who have repaid mortgages and do not own a home in Hangzhou in their own name can now apply for financing under the first home loan policy, a number of local banks said in notices issued on Nov. 11.

Previously, they were bound by the down payment rule and interest rates in place for second homes, even if they had repaid their first mortgage and sold the original property.

The policy relaxation reflects the huge pressure on property transactions, said Yan Yuejin, research director at the E-House China Research and Development Institute’s think tank. It will slash costs for homebuyers, stabilizing the real estate sector and market expectations, as well as sending out positive signals, he added.

Though the local government has yet to make an official announcement, the new rules have already taken effect, with a question-and-answer session likely to be held later, a source in the Hangzhou property market told Yicai Global. A local buyer also said a number of banks in the city confirmed that the change had already taken place.

Hangzhou also trimmed the down payment ratio on second homes to 40 percent to 60 percent, with a 4.9 percent mortgage rate. No changes were made to the first home buying policy, which requires at least 30 percent payment up front and a minimum 4.1 percent interest rate. 

Editor: Martin Kadiev