(Bloomberg) -- China took steps to lower borrowing costs on as much as $5.3 trillion in mortgages for millions of families in its latest attempt to shore up the troubled property sector.
Homeowners will be able to renegotiate terms with their current lenders effective Nov. 1, the People’s Bank of China said in a statement late Sunday. Those who chose fixed mortgage rates can also renegotiate new loans based on the latest loan prime rate, a reference rate for mortgage loans, according to the statement.
The plan, flagged as part of a broad stimulus package earlier this week, underscores Beijing’s determination to end the prolonged housing rout that’s dragged on growth in the world’s second-largest economy.
The measures will slash outstanding rates for individual borrowers by an average of 50 basis points, and reduce their annual interest expenses by about 150 billion yuan ($21 billion), PBOC Governor Pan Gongsheng said earlier in September. Banks usually reprice existing loans at the beginning of the year based on the five-year loan prime rate, which has been lowered by 35 basis points.
Last year’s mortgage refinancing push reduced outstanding rates by an average of 73 basis points and lowered borrowers’ annual interest expenses by about 170 billion yuan, the PBOC said in a July report.
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