Significant Increase in Loan Limits; Multiple Cities Continue to Adjust Housing Fund Policies

In recent times, several cities have continued to adjust their housing provident fund policies, helping boost the heat in the housing market. Among them, multiple cities have successively raised the maximum amount for provident fund mortgage loans by a significant margin, which has also played a positive role.

On March 30, Hangzhou issued a policy to optimize the use of the housing provident fund. It optimizes aspects including the housing provident fund loan amount, the recognition of the number of loan times, and the purposes for withdrawals. The policy clearly states that contributing employees and their spouses may withdraw their housing provident fund to pay property management fees for self-occupied housing within the administrative area of this city. Each year, the family may withdraw once for 1 self-occupied housing unit in the family’s name based on the actual property management fee expenditures. The total amount withdrawn by the family in the given year shall not exceed 10,000 yuan.

The policy also clearly states that the maximum amount for housing provident fund loans will be increased from 1.3 million yuan to 1.8 million yuan, and the individual loan amount that employees can apply for shall not exceed 900,000 yuan. The calculation multiple for the individual loan amount that housing provident fund employees can apply for will be adjusted from 15 times to 20 times. The policy provides upward support for key groups: for new urban residents and young people’s families, the loan amount can be determined by increasing the combined total of the loanable amounts calculated when the family applies for a loan by 20%; for families with multiple children, the loan amount can be determined by increasing the combined total of the loanable amounts calculated when the family applies for a loan by 50%.

A reporter’s review finds that since last year, cities including Beijing, Shanghai, and Shenzhen have successively raised the maximum amount for housing provident fund loans by a significant margin, which has had a positive effect as well. Taking Shenzhen as an example, the latest monitoring by the Shenzhen Beike Research Institute shows that with the policy continuing to exert efforts last year, from January to mid-March this year, Shenzhen’s average housing provident fund loan amount for second-hand home transactions was 1.25 million yuan, up significantly by 32% year over year, becoming an important signal of optimization in the housing market’s credit structure.

Li Yujia, chief researcher at the Guangdong Provincial Housing Policy Research Center, said that raising the loan amount is mainly to reduce the cost of buying a home and to promote the demand for upsizing or moving. After all, the expenses involved in moving homes are relatively large, and homebuyers are now more sensitive to increasing leverage and the tax and fee costs of purchasing a home, especially the middle-income group. At the same time, considering that the housing provident fund can also be withdrawn to pay the down payment—“it can both be withdrawn and used for a loan”—the effect on lowering costs and lowering barriers is especially prominent.

“Previously, financial accelerators helped drive prosperity in the housing market. Now, the accelerator has reversed into a decelerator, and homebuyers are unwilling to add more leverage. Therefore, how to maintain the warmth of leverage is crucial for the stability of the housing market. Recently, in many places, the amount of housing provident fund loans and the proportion of buying a home have clearly increased, and this is a good sign.” Li Yujia said. He expects that after the loanable amount increases, it will help bring two categories of groups into the market: one is cost-sensitive homebuyers, and the other is homebuyers who have relatively more balance and can play a huge effect on the down payment.

Chen Wanjing, Director of Policy Research at the China Index Academy, said that first-tier cities are expected to optimize purchase restriction policies in a timely manner in line with market changes, better play the leading role of core cities, and boost confidence in the national market. More cities are expected to further optimize housing provident fund loan policies and increase housing purchase subsidies. Meanwhile, the mortgage interest rates and transaction costs in various places are also expected to be further lowered, continuing to reduce homebuyers’ costs of home purchase.