(Bloomberg) — A spurt of home sales in China’s biggest cities is losing momentum less than two weeks after authorities loosened mortgage restrictions, raising doubts over whether the steps are enough to revive the market before a crucial busy season.
While a dearth of official statistics makes it difficult to gain a comprehensive view, checks by industry watchers suggest that the rebound is fading in tier-1 cities.
Even in Beijing, which reacted the most to the stimulus, sales of existing homes plunged 35% to about 1,700 units last weekend from 2,600 in the weekend immediately after the easing, according to estimates by Centaline Group analyst Zhang Dawei based on his channel checks. New homes sold by developers in the capital city showed a similar trend. Centaline is one of China’s top property agencies.
Higher mortgage rates continue to take their toll on mortgage demand, especially for refinancing.
Total mortgage application volume dropped 0.8% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — $726,200 or less — increased to 7.27% from 7.21%, with points increasing to 0.72 from 0.69, including the origination fee, for loans with a 20% down payment.
Demand for refinances dropped 5% for the week and was 31% lower than the same week one year ago. The refinance share of mortgage activity decreased to 29.1% of total applications from 30.0% the previous week. As a comparison, at this time of year in 2020, when pandemic monetary policy had interest rates around 3%, the refinance share of mortgage applications was 63%.