The mortgage discount rate for first-time buyers has just been cut from 30 to 15 percent. This is aimed at curbing excessive credit and tightening liquidity, but the move comes at the expenses of prospective homeowners.
The true purpose is to boost banks' own profits. With the 30 percent cut, homebuyers must pay a 4.298 percent interest rate for their mortgages, while banks usually pay 1 percent interest rate to borrow from the central bank. Mortgages will become even more lucrative after the discount is annulled.
Such measure blatantly violates the principles of fairness in policymaking. Buyers of first homes, low-income households, and other vulnerable groups should be treated favorably. Housing policy should target the wealthy owners of multiple houses, whose speculation drives housing price up.
The favorable treatment for first-time homebuyers should have never stopped. Tax abatements, mortgage discounts and other means should be offered to people genuinely looking to buy a home.
This could efficiently minimize the irrationality of housing markets. A policy that treats all buyers the same, and exploits them all for the banks' profits, is an unfair one.
This article was first published in Chinese at the Yanzhao Metropolis Daily.