Recently, the General Office of the Communist Party of China Central Committee and the General Office of the State Council issued the "Special Action Plan for Boosting Consumption" (hereinafter referred to as the "Plan"), which proposes to better meet the demand for housing consumption. The plan also proposes to timely reduce the interest rate of housing provident fund loans. Expand the scope of use of housing provident fund, support depositors to apply for personal housing loans from housing provident fund while withdrawing the provident fund to pay the down payment for purchasing a house, increase support for rental withdrawal, and promote the pilot work of flexible employment personnel deposit. Regarding this, Chen Wenjing, Director of Policy Research at the Zhongzhi Research Institute, stated that housing consumption is a key link in stimulating consumption and expanding domestic demand. Measures related to housing provident fund can effectively reduce the threshold and cost for homebuyers. The policy of accurately supporting demand and releasing housing provident fund has played an important role in boosting housing consumption demand and promoting the stabilization of the real estate market. The National Conference on Housing and Urban Rural Development to be held in December 2024 requires the effective utilization of housing provident fund support. According to statistics from the Zhongzhi Research Institute, since the beginning of this year, about 90 cities (districts) in China have introduced about 130 policies, including about 50 policies for housing provident fund loans. The optimization directions mainly include reducing the down payment ratio of first and second home housing provident fund loans, increasing the maximum amount of housing provident fund loans, and optimizing the criteria for determining the number of housing units for housing provident fund loans. Taking Shenzhen as an example, on March 16th, the Shenzhen Housing Provident Fund Management Committee issued the "Supplementary Provisions on the Management Regulations of Shenzhen Housing Provident Fund Loans", optimizing the housing provident fund loan policy in Shenzhen, including adjusting the calculation rules of the loanable amount of housing provident fund loans, adjusting the maximum amount of housing provident fund loans, and dynamic adjustment mechanisms. The main body of current housing consumption is the rigid demand group and the replacement demand group, who are highly sensitive to the cost and threshold of purchasing a house Li Yujia, Chief Researcher of Guangdong Housing Policy Research Center, stated that the main function of the housing provident fund policy is to lower the threshold and cost of housing consumption, and to provide precise support for the release of potential housing demand. The 'Plan' proposes multiple optimization directions for housing provident fund policies. Yan Yuejin, Vice President of Shanghai E-house Real Estate Research Institute, told Securities Daily reporters that 'timely reduction of housing provident fund loan interest rates' is particularly noteworthy, and the market has high demand for it. It is expected to be implemented in the near future. Combined with the trend of a "small spring" in the real estate market, the housing provident fund will better play a role in boosting housing consumption. Li Yujia believes that the interest rates for commercial loans for the first personal housing in some regions are already in the range of 3.1% to 3.3%, which is not significantly different from the interest rates for housing provident fund loans. In May 2024, the People's Bank of China issued a notice to lower the interest rate of individual housing provident fund loans. After this adjustment, the interest rates for personal housing provident fund loans for first and second homes over 5 years are 2.85% and 3.325%, respectively. Since the 2019 anchor change of commercial loan interest rates for LPRs over 5 years, the cumulative reduction of LPRs over 5 years has been 125 basis points. During this period, the number of floating points in each city also decreased to varying degrees. The interest rate for housing provident fund loans over 5 years has only been reduced by a cumulative 40 basis points since 2019 Chen Wenjing analyzed that timely reduction of housing provident fund loan interest rates will further reduce the cost of home ownership for homebuyers, and the decrease in housing provident fund interest rates is also expected to release some space for the reduction of commercial loan interest rates. The Plan also proposes to expand the scope of use of housing provident fund and support depositors to apply for personal housing loans from housing provident fund while withdrawing the provident fund to pay the down payment for purchasing a house. The reporter noticed that currently, cities such as Guangzhou, Hangzhou, and Wuhan have all introduced relevant policies. Taking Guangzhou as an example, the Guangzhou Housing Provident Fund Management Center and the Guangzhou Housing and Urban Rural Development Bureau issued a notice in August last year on supporting the withdrawal of housing provident fund to pay the down payment for purchasing a house, and explicitly stated in the "Implementation Rules for Withdrawing Housing Provident Fund to Pay the Down Payment for Purchasing a House" that the withdrawal of the down payment does not affect the calculation of the loan amount when applying for a housing provident fund loan for the property. Chen Wenjing stated that the "Plan" further elaborates on policy measures to promote the release of housing demand, and it is expected that more cities will accelerate the implementation of measures such as increasing the amount of housing provident fund loans and supporting the withdrawal of provident fund as down payments. (New Society)