Real estate crisis in China: Central Bank makes biggest interest rate cut in history to boost the sector

Amid the crisis, China’s Central Bank reduced interest rates to boost the real estate sector (REUTERS)

He Central Bank of China Announced a new measure, which is part of his package with which he wants to face the economic crisis. from this tuesday five year credit preference rate reduced by 0.25 basis points 3.95 percentWhen one year rate remained at the same price, 3.45 percent.

This is the first time since May that the five-year rate has been reduced and even, The biggest cuts in history have been implemented.

The decision is the latest action by the Beijing regime in an effort to ease pressure on the weak real estate market, which is already biggest Since records have been made and, far from being calm, only it gets faster, Similarly, with the reopening of the markets a day before the Lunar New Year holiday week, state banks announced a series of credit schemes for billions of dollars, with which they also want to support developers who are facing difficulties. are doing. Debt contraction.

However, the decision left the one-year rate, the biggest benchmark for personal and corporate loans, unchanged.

The measure seeks to ease pressure on the weak real estate market, which has only intensified rather than calmed down (Reuters)

According to Lin Song of ING Economics, there may be cuts Improve Buyers’ ProspectsThat’s thanks to a decline in mortgage rates, though he in turn warned that the Chinese bank has little room to act, given the devaluation of the yuan and the lack of rate cuts at Western central banks.

For her part, Oxford Economics’ Lewis Lu analyzed the announcements and concluded that by lowering only one of the two main rates, officials are sending a message of great determination to support the economy.

“The enormity of today’s action, in our opinion, also reveals genuine concern The policy relaxations implemented so far have been slow among Beijing’s policymakers. little effect“, he said in a recent report.

However, many analysts have concluded that the problems in the real estate sector are not primarily dependent on interest rates, but are based on long-standing problems, so even if mortgage rates have already been reduced, Property sales continued to decline.

However, investors are still waiting for a stronger package of measures (Reuters)

That is why many market experts say that investors are eagerly waiting action Strong By governance, which sends a huge message of support to the real estate market and markets in general.

The Chinese economy is the second largest in the world and largely depends on the sector, allowing it to not only promote growth but also provide a large number of jobs. In fact, the sector contributes one-fourth of the country’s population.

However, months earlier, facing alarming levels of credit applications and an economic crisis, the executive ordered a series of severe measures, which led to dozens of developers defaulting on their loans and many others having difficulties in recovery even after some time. had to face. ,

(With information from AP)

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