BEIJING (Reuters) - China's commercial hub Shanghai has lowered the minimum downpayment ratios for home buyers and relaxed some home purchase restrictions, after the country lowered the national level in a market stabilising effort earlier this month.
Shanghai will lower the minimum downpayment ratio for first home purchases to 20%, and cut the ratio for second home purchases to 30% for suburban areas and to 35% for the rest of the city. The new rule will become effective on Tuesday.
Shanghai previously set the downpayment ratio for first home purchases at 30% and second homes at 40-50%.
Shanghai will also cut its minimum interest rates on first home mortgage to the loan prime rate (LPR) minus 45 basis points, compared to LPR minus 10 basis points earlier.
The city will also relax home buying restrictions for non-Shanghai residents by shortening the number of years of social insurance and income tax payments required before buyers become eligible. It will also abolish restrictions on home purchasing by divorced couples.
China on May 17 announced steps to stabilise its crisis-hit property sector, by slashing the downpayment ratio for home buyers and cutting interest rates of mortgages.
China lowered the minimum down payment ratio for first homebuyers to 15% and for second home purchases to 25% at a national level.
The four first-tier mega cities Shanghai, Beijing, Shenzhen and Guangzhou require higher minimum downpayments and higher mortgage interest rates than the national levels.