(Reuters) – China is considering allowing homeowners to refinance as much as $5.4 trillion in mortgages to reduce borrowing costs, Bloomberg News reported on Friday, citing people familiar with the matter.
Homeowners can negotiate terms with their current lenders before January when banks reprice mortgages, the report said, adding that they would be allowed to refinance with a different bank for the first time since the global financial crisis.
China has been stepping up its efforts to support the property sector, which at its peak accounted for a quarter of the economy, including reducing mortgage rates and lowering home buying costs.
Morningstar equity analyst Jeff Zhang said the rate renegotiation affects existing homes, so no material boost to new home demand is expected.
“We think the measure mainly helps prevent early repayment of mortgages, and homeowners may use the money saved for more consumption,” Zhang said.
($1 = 7.0851 Chinese yuan renminbi)
(Reporting by Gnaneshwar Rajan and Rishabh Jaiswal in Bengaluru; Additional reporting by Ziyi Tang; Editing by Himani Sarkar)
