Chinese commercial banks cut mortgage rates to boost property sales
A real estate agent (right) talks to visitors about a residential development on Saturday at the Shanghai Real Estate Expo, which ran through Saturday at the Shanghai Exhibition Centre. Shanghai’s property market remained calm over the Labor Day holiday, with many buyers adopting a wait-and-see attitude, according to a report aired on Saturday by Shanghai TV. Photo: Yang Hui/GT
Commercial banks in several Chinese cities have decided to cut mortgage rates for home purchases, after the People’s Bank of China (PBC), China’s central bank, cut its benchmark lending rates last week, in a a move that experts say could boost property sales after weak demand last year.
An employee at a Bank of Communications branch in Shanghai told the Global Times on Monday that the bank had cut rates for first-time home buyers by 5 basis points (bps) to 4.65%.
The bank also cut the rate for second homes to 5.2%, also down 5 basis points.
“It’s hard to say if the mortgage rate will change more in the near term. Maybe it will, with the changes in the loan prime rate (LPR),” the person said.
A staffer at the Industrial and Commercial Bank of China (ICBC) in Shanghai said the bank was offering mortgages at 4.95% to first-time home buyers, also down 5 basis points.
In Beijing, ICBC’s rate for first-time buyers is 5.15%, down 5 basis points, a Beijing-based ICBC personal credit officer told the Global Times on Monday.
Banks cut rates, mostly by 5 basis points, after the PBC cut the one-year LPR rate by 10 basis points to 3.7% on January 20. In December, the PBC cut the one-year LPR rate by 5 basis points, the first time since April 10.
The PBC also cut the five-year LPR by 5 basis points to 4.6% this month, a move that experts said would benefit the real estate sector, which is suffering from tight liquidity and demand. weak.
“The five-year decline in the LPR is a strong signal from the government that it intends to stabilize the property market. It can also be seen as a signal that the property market has bottomed out and will start to rebound,” said Zhou Maohua, an analyst at Everbright Bank, told the Global Times.
As banks gradually cut mortgage rates following the PBC’s decision, experts see a rebound in home purchases this year as consumers and businesses face lower costs to buy homes or invest in building them .
Yan Yuejin, a veteran in the real estate market, said property prices in China are unlikely to continue falling this year. He predicted that transactions could increase, but by less than 5%, this year.