BEIJING - China's central bank and the banking and insurance regulator have established a dynamic adjustment mechanism on mortgage rates for first-time home buyers, the central bank said on Thursday, in a bid to further support the property sector.

For cities where the selling prices of new homes fall month-on-month and year-on-year for three consecutive months, the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases, according to a statement by the People's Bank of China.

In late September, the central bank had allowed localities to take similar action until the end of 2022.

The move is more flexible than September's policy, said Chen Wenjing, analyst at China Index Academy, one of China's biggest real estate research firms, adding "it will lower the cost of buying a home and help better support rigid and improved housing demand."

The crisis in China's property market, once a pillar of the world's second biggest economy, worsened last summer after official data projected home prices, sales and investment all falling.

In recent weeks, policymakers have ramped up support for the industry to relieve a long-running liquidity squeeze that has hit developers and delayed the completion of many housing projects.

Ni Hong, head of China's housing regulator, on Thursday also vowed to give strong support to first-time homebuyers by allowing smaller down payments and cutting mortgage interest rates, according to state broadcaster CCTV.

Ni added he was confident the property market would stabilize and recover in 2023.

(Reporting by Liangping Gao and Beijing Newsroom; Editing by Mark Potter and Chizu Nomiyama)