(Yicai Global) Dec. 31 -- Ningbo has become the first Chinese city to increase the maximum amount families can borrow through its housing provident fund to support those with two or three children after the country introduced a three-child policy less than five months ago.

On Jan. 1, Ningbo will raise the housing provident fund loan ceiling by 33 percent to CNY800,000 from CNY600,000 (up to USD126,113) for families that intend to buy their first homes, the city in Zhejiang province announced yesterday.

The move follows others done by many provinces to encourage couples to have more kids after the country implemented its three-child policy in August. Beijing was the first city to respond to the new policy. On Aug. 20, the capital city's housing and urban-rural development commission said it will prioritize families with more than one child aged below 18 on the list to receive public rental housing.

But the latest shift is pioneering in another way. Ningbo's adjustment is China’s first housing provident fund policy to encourage families to have a third child, said Yan Yuejin, head of research at a think tank run by Shanghai E-House Real Estate Research Institute. It is not aimed at boosting the real estate market but to help big families in China, he added.

More regions are expected to follow suit, said Yan. Local governments of Gansu province's Linze county, Beijing's Chaoyang district, and Jiangsu province's Hai’an have already implemented supportive housing policies for three-child families. Moreover, eastern China's Anhui and southern Guangdong provinces now prioritize big families with minors when granting public rental housing.

But there are caveats. Ningbo's policy requires families to be first-time applicants and first-time homebuyers, according to Yan. Moreover, the parents must have taken care of their housing provident fund payments for two straight years before the purchase.

The loan terms are generous. Ningbo's commercial loan rate is 5.45 percent on average, and the housing provident fund loan rate is 3.25 percent. Consequently, raising the loan ceiling by CNY200,000 would mean that families can save by more than CNY200 (USD31) per month on 20-year loan interest, or about a can of baby formula.

Editor: Emmi Laine