BEIJING, Sept 29 (Reuters) – China on Tuesday cut the rate on a key central-bank lending facility and announced interest subsidies on new commercial mortgages for eligible first-time homebuyers, its latest effort to support a slowing economy.
The move comes after the cabinet pledged to step up counter-cyclical policy support to address rising economic strains.
The People’s Bank of China will cut the rate on its pledged supplementary lending (PSL) by 25 basis points, while the rate on one-year PSL will be cut to 1.5% from 1.75%, it said in a statement.
The PBOC will also broaden the PSL facility to support investment in water, power-grid, computing, communications, urban pipeline and logistics networks, it said.
It raised the quota for its sci-tech innovation and technological upgrading relending facility by 200 billion yuan ($29.84 billion) to 1.4 trillion yuan, and increased its relending quota for farm and small businesses by 500 billion yuan to 4.85 trillion yuan.
The central bank also raised its relending quota for private enterprises by 300 billion yuan to 1.3 trillion yuan.
The central bank said it would maintain ample liquidity and guide interest rates to levels that support the real economy.
Meanwhile, the central bank and financial regulator said on Tuesday that China will subsidise interest payments on new commercial mortgages for eligible first-home buyers nationwide from October 1.
The government will provide an annual interest subsidy of 1 percentage point for up to five years on qualifying loans, with the subsidised portion capped at 1 million yuan per household, a statement released by the finance ministry showed.
Eligible homes must have a floor area of no more than 120 square metres and a purchase price of no more than 1.5 million yuan per household, the statement showed.
($1 = 6.7030 Chinese yuan renminbi)
(Reporting by Beijing newsroom and Kevin Yao; Editing by Andrew Heavens, Aidan Lewis)
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