People's Bank of China announces major monetary stimulus and mortgage subsidies

The People's Bank of China (PBoC) has announced a series of monetary policy measures to support economic growth and stabilize financial markets. Key actions include reducing the one-year Pledged Supplementary Lending (PSL) rate by 25 basis points, from 1.75% to 1.5%, and expanding the scope of PSL to include infrastructure projects such as water, power, computing, communication, urban underground, and logistics networks.

To bolster specific sectors, the PBoC is increasing re-lending quotas. The quota for technological innovation and technical transformation will rise from 1.2 trillion yuan to 1.4 trillion yuan, with the support ratio increasing to 100%. Additionally, re-lending for agriculture and small businesses will increase from 4.35 trillion yuan to 4.85 trillion yuan, including a 300 billion yuan increase specifically for private enterprises.

Furthermore, the Ministry of Finance, in coordination with the PBoC and financial regulators, will implement a national mortgage interest subsidy policy. Starting October 1, 2026, for a provisional period of one year, the policy will provide a 1% annual interest subsidy for up to five years on new first-time homebuyer commercial mortgages. To qualify, homes must be under 120 square meters and priced below 1.5 million yuan. The central government will cover 90% of the subsidy costs, with local governments covering the remaining 10%.