The Chinese government plans to provide 200 billion yuan ($29.3 billion) in special loans to complete halted housing projects, according to Bloomberg News. The loans mark the biggest-ever financial commitment by China to curb the mortgage crisis that resulted in nationwide boycotts earlier this year.

China Prepares Largest-Ever Financial Commitment to Address the Property Crisis

Bejing is set to offer 200 billion yuan ($29.3 billion) in special loans to finish stalled housing projects in China, Bloomberg reports. The lending program, which was announced Friday with undisclosed size and sparse details, represents China’s biggest financial commitment yet to address a property crisis that battered the country’s real estate market.

Last month, the mortgage crisis led to nationwide boycotts in China after hundreds of thousands of homeowners made advance payments and took out loans on properties that insolvent developers failed to complete. Chinese authorities limited access to sources reporting the true extent of the boycotts, forcing homebuyers to report the data on GitHub.

The mortgage crisis and boycotts spooked global investors who were betting on the Chinese real estate sector and drove down the prices of stocks and bonds of the local property firms. According to GitHub data, boycotts spread across 86 cities after hundreds of unfinished projects halted construction.

China Cuts 5-Year Mortgage Rate Again

Bejing has reduced its mortgage lending rate for the second time this year as the People’s Bank of China (PBOC) struggles to curb the liquidity crisis in the real-estate sector. The PBOC slashed the 5-year lending rate to 4.3% from 4.45% Monday, more than what analysts expected.

The rate cut will reduce borrowing costs on new mortgages in China and revitalize the country’s troubled real estate sector, which contributes nearly a third of its annual economic output. Some analysts believed that the rate cut was unlikely to restore developers’ lowered confidence, which the new lending program is likely to address.

China’s economic growth has significantly slowed down due to global inflation, property crisis, and the country’s stringent zero-COVID policy which led to extensive lockdowns in the country this year. China’s gross domestic product (GDP) grew just 0.4% in the second quarter, marking the country’s worst economic performance since Q1 2020. Late last month, China indicated that it may miss its annual economic growth target as coronavirus restrictions continue to take a toll on its economy.

This article originally appeared on The Tokenist

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.