China just made it easier for people to buy homes, in a move that could affect $3.5 trillion in mortgage loans as Beijing seeks to bail out a property market mired in a record slump and worsening cash crunch.

Down payments will be set at a minimum of 20% for first-time buyers and a minimum of 30% for second-time buyers nationwide, according to a joint statement by the People's Bank of China (PBOC) and the National Administration of Financial Regulation (NAFR) released late Thursday.

That's a big cut from the existing requirements of minimums of 30% and 40% for first-time and second-time buyers in cities that implement home-buying restrictions, such as Beijing and Shanghai.

In addition, minimum mortgage rates for buyers of second homes should be no less than 20 basis points over the loan prime rate (LPR), the statement said. Currently, minimum mortgage rates for second-time buyers are no less than 60 basis points over the LPR.

The LPR is the benchmark for most household and corporate loans in China and is set by the central bank each month.

The regulators also indicated in a separate statement that rates on existing mortgages for first-home purchases can be renegotiated between banks and customers starting September 25. The regulators have encouraged banks to offer lower rates.

"The drop in the interest rates of existing housing loans can save interest expenses for borrowers, which is conducive to expanding consumption and investment," the regulators said.

"For banks, it can effectively reduce the phenomenon of early loan repayment and mitigate the impact on banks' interest income," they added.

The new policy measures could affect 40 million home buyers and impact 25 trillion yuan ($3.5 trillion) in mortgages, which is about two thirds of the country's housing loans, state-owned Yicai reported on Thursday, citing people close to the regulators.