(Yicai) May 17 -- Stocks of Chinese real estate companies recovered today after the central bank eased housing policies linked to down payments and mortgage rates to rekindle sluggish home sales.

Several big mainland-listed property developers surged by the 10 percent daily limit today. China Vanke [SHE: 000002] closed at CNY9 (USD1.30), Poly Developments and Holdings Group [SHA: 600048] ended the day at CNY11.20 (USD1.50) and Gemdale [SHA: 600383] finished at CNY4.57.

Moreover, Greenland Holdings [SHA: 600606], Grandjoy Holdings Group [SHE: 000031], China Fortune Land Development [SHA: 600340], and Rongan Property [SHE: 000517] hit the limit-up.

The People's Bank of China announced today that the minimum down payment ratio for individuals purchasing their first homes will be lowered to 15 percent from the earlier 20 percent. Those who are buying their second homes will need to fork out 25 percent of the total price in advance, down from 30 percent.

The central bank also said that from tomorrow, interest rates for individuals who make use of loans coming from the housing provident fund, a public housing program, will be cut by 25 bips. That means that people who are buying their first homes can enjoy a rate of 2.35 percent on mortgages with a term of less than five years or a rate of 2.85 percent for longer maturities. Second-home buyers can apply for short-term loans at a rate of 2.775 percent while longer-term ones carry a rate of 3.325 percent.

The PBOC also removed a minimum limit on commercial mortgage rates even though banks tend to require higher rates than the housing provident fund. Thereby, local governments are allowed to independently determine interest rates based on local conditions.

The series of fresh policies are beneficial for reducing residents' cost of buying a home, enhancing their willingness to purchase housing, and creating a more favorable credit environment to stabilize the real estate market, Pang Ming, chief economist of the Chinese arm of property consulting firm Jones Lang LaSalle, said to Yicai.

However, only using monetary policies such as lowering the down payment ratio and interest rates cannot fundamentally solve the cyclical real estate recession, Pang said, adding that policies should thoroughly consider changes in supply and demand, create systematic plans, and strive for a balance between supply and demand.

Editors: Dou Shicong, Emmi Laine