China Taps $1.5 Trillion Fund To Offer Cheap Mortgages, Boost Housing Demand

China is using a $1.5 trillion housing provident fund to offer cheaper mortgages and stimulate its struggling real estate sector. This move aims to counteract declining demand and support the middle class, whose wealth is heavily tied to property. The fund, a government savings program, has been increasingly important as banks become more cautious. The government is trying to emulate the success of Fannie Mae and Freddie Mac from the US, but some analysts are skeptical. Local governments are relaxing rules on the fund to reduce mortgage burdens, and sales remain down, which is alarming. The People's Bank of China also cut interest rates on fund-provided mortgages, making them cheaper than bank loans. Despite the efforts, analysts believe the measures may not be enough to revive the market due to weak demand. However, the fund has ample resources for more aggressive lending and has contributed to the market. The lower rates have provided some relief, particularly for younger buyers.