BEIJING (Reuters). Several Chinese cities are beginning to loosen downpayment requirements for home purchases. This is in an attempt to re-ignite buyers interest and to put a ceiling under weak local economies.

Two sources close to the situation said that Heze, an eastern city, is now allowing homebuyers to make lower down payments for their purchase. This was among the first cities to relax the lending rule.

China’s regulators have impacted the borrowing of property developers. They are reducing cashflow and chilling buyers.

Sources say that buyers without a mortgage history have had their minimum down payment ratio reduced to 20%, from 30%. Buyers with only one property, however, will see a reduction to 25%. Bank loans are used to make the remainder of the payments.

Local media reports that banks have agreed to lend more loans due to the low down-payment ratio. This was done to boost demand.

Zhiwei Zhiwei Zhang (chief economist at Pinpoint asset Management) stated, “This is the first city to reduce the down payment ratio for mortgage loans.” It may signal that policy easing has entered a new stage in the property industry.

Heze, Shandong’s housing regulator, did not announce the decision. It is a city of 8.79million people. The company did not immediately reply to a Reuters inquiry for comment.

The state-backed Shanghai Securities Journal also allows 20% down payment ratios for first home buyers from the Chongqing city and Ganzhou cities in south Jiangxi.

According to the Journal, these down-payment reductions are only in those cities that haven’t implemented curbs on home purchase.

Many cities have been taking measures to boost local property markets since late 2021. These include increasing mortgage loans and lowering mortgage rates, as well as providing subsidy for home purchase.

China moved earlier this month to allow real estate firms to have easier access to pre-sale proceeds for residential projects held in escrow account accounts. It did so to relieve their funding stress.

These measures were taken ahead of China’s annual meeting of parliaments and the March gathering of the mostly ceremonial advisory body the Chinese People’s Political Consultative Conference.

JP Morgan stated in a note, “After the Two Sessions of March in early March we think more local government (especially higher-tier municipalities) will implement demand-side ease.”

The Mainland Properties Index and the CSI 300 Real Estate Index both rose around 2% on Friday for developers listing in Hong Kong and China.