China Mortgage Interestes fall for the first time in years.
After several years of rising mortage interest rates china has now decreased the cost of money to homebuyers.
The general 1 year interest rate has fallen to 7.20% from 7.47%.
More Relevant to most homebuyers the rate of a 5 Year or longer loan has fallen to 7.74%, but that’s only a little change from the 7.83% before.
Will this be enough to lift the transaction slum the Real Estate Industry has been in the last 3 months?
Shanghai’s Transaction volume is near Zero in most parts of the city, it’s a dead market, no buyers, no sellers.
Our Office is a little like a gathering place for many top agents from many of the big companies.
Nowadays nearly 20 people gather outside our shop and discuss various things from housing to the latest movie.
All of a sudden everybody has a lot of time on their hands.
Don’t get me wrong, there are still deals being done, and especially in this circle of Agents dealing with luxury properties we almost daily get new prospects who are in the market to buy a house.
(But our Company deals mainly with historic properties for which the rule of high demand and low supply is still in tact.)
What is interesting too is that besides a few desperate sellers there hasn’t been a lot of homeowners that are willing to take a loss yet.|
Most people, even in this market clinch on to their original asking price and are, at least right now, reluctant to negotiate lower prices for their homes.|It reminds me a little of some of my friends who lost 2/3 of their money in chinese stocks.
Everybody I know of that lost this much still has the stocks, they didn’t sell, and their holding on.
In Chinese mentality you can only sell on a profit.
There even is a proverb: Feel free to make any deal, but never do unprofitable one’s.
In my opinion, the interest rate decline, will at the most, ease the pain of the monthly payments many landlords have currently.
Below is a graph I created with the last 10 Year Interest Rate movement for chinese house mortgages.
Stay Tuned