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Since entering August, provident fund policies have been continuously optimized in various regions, especially in first- and second-tier cities. Recently, first- and second-tier cities including Guangzhou, Kunming, Guiyang, and Shenyang have adjusted their housing provident fund policies, involving lowering down payments, raising the maximum amount, and supporting provident funds to pay for down payments on home purchases.

In the view of industry insiders, with only six provinces and cities remaining where the national purchase restriction policy has been basically abolished, the room for adjustment of real estate policies is becoming increasingly limited, and the housing provident fund policy can effectively tap into housing demand.

Support the withdrawal of provident funds for down payment to lower the threshold for buying a house

In the new provident fund policy in August, Guangzhou’s support for using provident funds to pay down payments on home purchases attracted attention.

Starting from August 1, housing provident fund payers who purchase newly built commercial housing within the administrative area of ​​Guangzhou City can apply to withdraw housing provident funds in their own and their spouse's name to pay the down payment for the purchase of the house.

Specifically, after the buyer and his/her spouse purchase a newly built commercial housing within the administrative area of ​​Guangzhou and complete the online signing of the commercial housing sales contract, they can apply to transfer the balance of the housing provident fund account to the commercial housing pre-sale fund supervision account of the project to which the purchased house belongs, in accordance with the contract agreement, to pay the down payment for the house.

Li Yujia, chief researcher of the Guangdong Housing Policy Research Center, said that for Guangzhou, purchase restrictions have been basically withdrawn, down payments for mortgages have dropped to a historical low, and tax policies have been exhausted, such as the VAT exemption period of "5 to 2", and there is no lower limit for mortgage interest rates. The policy space available is very narrow, and the provident fund tool will come to mind at this time. The real estate market continues to decline, and the motivation for buying houses is weak, but the provident fund payment (large deposit amount and high proportion) mainly by institutional units and employees is still ongoing, resulting in a relatively high water level in the provident fund pool, far away from the warning line of 85% of the individual loan rate. At this time, there is a motivation to make good use of idle provident fund resources.

In addition to Guangzhou, on August 2, the Shandong Provincial Government Information Office held a regular briefing on provincial government policies to interpret the recently launched "Several Policy Measures on Further Promoting a Steady and Improving Economy and Improving Quality". Shandong will guide all cities to further optimize the provident fund withdrawal and loan policies. Depositors can withdraw housing provident funds from their personal accounts to pay for the down payment of housing purchases, and can also apply for housing provident fund loans to effectively improve the payment ability of depositors.

Chen Wenjing, director of market research at China Index Academy, said that since the beginning of this year, about 20 cities including Wuhan, Nanning and Langfang have introduced policies to support the withdrawal of provident funds for down payments.

Li Yujia said that the purpose of this move is to tap into effective demand, especially for new citizens who have only been working for a few years. If they can use provident fund savings as a down payment, the down payment threshold can be greatly lowered, thereby lowering the threshold for buying a house.

Li Yujia further said, however, that only a larger amount of provident fund deposits can provide strong support for the down payment. New employees without houses or those who own houses but have the need to improve their living conditions are the two groups that will benefit from the policy and release demand.

Increase the credit limit, reduce the down payment, and relax the scope of cross-regional mutual recognition in the future

In addition to supporting the use of provident funds to pay down payments for home purchases, the new provident fund policies in August mainly focus on increasing loan amounts and reducing down payments, which is also the current mainstream provident fund policy.

On August 2, the Kunming Housing Provident Fund Management Center of Yunnan Province issued a notice that the minimum down payment ratio for depositor families applying for housing provident fund loans to purchase a second improved self-occupied housing will be reduced from 30% to 20%. The policy adjustment will be implemented from August 5, 2024.

At the same time, for families of depositors who have two or three children and purchase their first home for self-use and meet the conditions for housing provident fund loans, the maximum amount of housing provident fund loans will be increased by 20% and 30% respectively.

In addition, for talents under Kunming’s “Spring City Plan” who purchase newly built commercial housing and meet the housing provident fund loan conditions, the maximum amount of housing provident fund loans will be increased by 50%.

Coincidentally, according to the Housing Provident Fund Management Center of Guiyang City, Guizhou Province, from August 1 to December 31, 2024, Guiyang City will phase in the maximum loan amount of the Housing Provident Fund.

After the adjustment, the maximum loan amount will no longer distinguish between single depositors and double depositors, first set and second set. The maximum loan amount will be increased from 500,000 yuan to 800,000 yuan, and the amount for families with many children will be increased by another 200,000 to 1 million yuan; for first-time home buyers in Gui'an New District, the amount will be increased to 960,000 yuan for non-family families and 1.2 million yuan for families with many children; for holders of four types of talent cards (Guiyang Talent Service Green Card, Construction Talent Card, Provincial Talent Card, Provincial High-level Talent Service Green Card), the maximum loan amount will be uniformly increased to 1.5 million yuan.

In addition, starting from August 1, Shenyang also increased the housing provident fund loan amount. For employees who contribute to the housing provident fund alone, the maximum loan amount was adjusted from 600,000 yuan to 650,000 yuan; for couples who contribute to the housing provident fund, the maximum loan amount was adjusted from 800,000 yuan to 850,000 yuan; for family members of three or more who contribute to the housing provident fund and jointly apply for a provident fund loan, the maximum loan amount was adjusted from 1 million yuan to 1.05 million yuan.

At the same time, Shenyang supports the improvement of housing needs of multi-child families. For multi-child families with two or more children, if they use housing provident fund loans to purchase self-occupied housing for the first time, they will be subject to the first down payment ratio and first loan interest rate. If they use housing provident fund loans to purchase self-occupied housing again, they will be subject to the first down payment ratio and second loan interest rate. At the same time, the housing provident fund loan limit for multi-child families has been relaxed to 1.3 times the current maximum loan amount to support the continued implementation of the policy.

According to statistics from China Index Academy and Beijing News, more than 40 cities have introduced housing fund optimization policies since July. Chen Wenjing said that the optimization direction is mainly to reduce the down payment ratio of the first and second housing fund loans, lower the housing fund loan interest rate, increase the housing fund loan amount, support the withdrawal of housing fund balances for down payments, etc. The current housing fund loan interest rate for more than 5 years is 2.85%, which can help home buyers reduce the cost of buying a house and boost their sentiment to a certain extent.

Chen Wenjing further stated that in the future, in terms of provident fund policies, further optimization may be carried out in terms of relaxing the scope of mutual recognition of provident funds across regions, further increasing provident fund loan amounts, and lowering provident fund loan interest rates.

Beijing News reporter Duan Wenping

Edited by Yang Juanjuan, proofread by Liu Baoqing