China property stocks surge due to home mortgage stimulus

• Beijing has announced that it will lower the interest rates on existing individual mortgages by an average of 0.5 percentage points and reduce the down-payment ratio for second homes purchases to 15% from 25%, as stated by People's Bank of China Gov. Pan Gongsheng on Tuesday.
• The Hang Seng Mainland Properties Index experienced a 5% increase following the announcement, which caused it to surge when Hong Kong markets opened.
• Real estate developers such as China Resources Land, Longfor Group Holdings, and China Overseas Land & Investment were among the largest gainers in Hong Kong-listed shares, with increases of up to 4.22%, 3.31%, and 2.84%, respectively.

On Tuesday, Chinese property stocks surged due to the announcement of monetary easing measures by top financial regulators aimed at easing the burden on millions of families and revitalizing the real estate market.

On Tuesday morning, during a high-level press conference, People's Bank of China Gov. Pan Gongsheng declared that Beijing would lower the interest rates on existing individual mortgages by an average of 0.5 percentage points and reduce the down-payment ratio for second homes purchases to 15% from 25%.

For the first time, down payment levels for first and second homes have been unified, and the lower rate is predicted by the PBOC to decrease the average household interest payments on mortgages by 150 billion yuan annually ($21.25 billion).

The Hang Seng Mainland Properties Index experienced a 5% increase following the announcement, which caused it to surge when Hong Kong markets opened.

Real estate developers such as , and experienced significant gains on the Hang Seng index, with increases of up to 4.22%, 3.31%, and 2.84%, respectively.

The Chinese government has been increasing its assistance to alleviate the financial strain on households and strengthen the struggling real estate market.

The first eight months of this year have seen a more than 10% decline in property-related investment, despite previous measures aimed at promoting recovery.

The central bank will provide guidance to commercial banks to enhance their pricing mechanisms for mortgage loans, and also reduce the reserve requirement ratio (RRR) by 50 basis points, as announced by Pan at the briefing.

William Wu, an analyst at Daiwa Capital Markets, stated in an email that the limited impacts from new measures are likely to result from the fact that "rate cuts on existing loans would not stimulate demand for new homes and may slow down the pace of further lowering the loan prime rates," according to CNBC's translation of the Chinese.

Last month, Bloomberg reported that China was considering a plan to enable homeowners to renegotiate their loan terms with their current lenders before January 2022. Additionally, homeowners may be permitted to refinance with a different bank for the first time in years, according to the outlet.