Key facts
- China's central bank cut the rate on its pledged supplementary lending facility by 25 basis points.
- The rate on one-year PSL was cut to 1.5% from 1.75%.
- China will subsidize interest payments on new commercial mortgages for eligible first-home buyers nationwide from October 1.
- The government will provide an annual interest subsidy of 1 percentage point for up to five years on qualifying loans.
- The subsidised portion of mortgage interest payments is capped at 1 million yuan per household.
- Eligible homes must have a floor area of no more than 120 square meters and a purchase price of no more than 1.5 million yuan.
China's central bank on Tuesday cut the rate on its pledged supplementary lending (PSL) facility by 25 basis points to 1.5%, its latest move to support a slowing economy. The People's Bank of China (PBOC) also announced that it would broaden the PSL facility to support investment in infrastructure projects.
In parallel, the central bank and financial regulator stated that China will subsidize interest payments on new commercial mortgages for eligible first-home buyers nationwide from October 1. The government will provide an annual interest subsidy of 1 percentage point for up to five years on qualifying loans, with the subsidised portion capped at 1 million yuan per household. Eligible homes must have a floor area of no more than 120 square meters and a purchase price of no more than 1.5 million yuan per household.
The PBOC also raised the quota for its sci-tech innovation and technological upgrading relending facility by 200 billion yuan to 1.4 trillion yuan. Additionally, its relending quota for farm and small businesses was increased by 500 billion yuan to 4.85 trillion yuan, and the quota for private enterprises was raised by 300 billion yuan to 1.3 trillion yuan. The central bank stated it would maintain ample liquidity and guide interest rates to levels that support the real economy.