China Mulls Allowing Refinancing On $5.4-T Mortgages

China is considering allowing homeowners to refinance as much as $5.4 trillion in mortgages to lower borrowing costs for millions of families and boost consumption, Bloomberg News reported.

China’s forceful steps to lower mortgage costs in recent years have mostly helped new property buyers.

Under the plan, homeowners would be able to renegotiate terms with their current lenders before January, when banks typically reprice mortgages, people familiar with the matter said, asking not to be identified discussing private information.

They would also be allowed to refinance with a different bank for the first time since the global financial crisis, the people said.

Authorities are intensifying a push to reduce mortgage costs after the central bank encouraged such support last year, and banks responded with a rare rate cut on outstanding mortgages for first homes.

China’s forceful steps to lower mortgage costs in recent years have mostly helped new property buyers.

The five-year prime rate, a benchmark for long-duration mortgages, was cut to 3.85% in July.

In May, the central bank scrapped a nationwide mortgage rate floor for first and second home purchases. Earlier, some mega cities allowed buyers who previously had a mortgage—even if fully repaid—to qualify for lower rates.