MNI BRIEF: Chinese Banks Cutting Mortgage Rates - PBOC

Chinese banks have reduced mortgage rates since March as the housing market slows due to a Covid outbreak and as the People’s Bank of China asks lenders to meet developers’ reasonable credit demand, PBOC officials told reporters Thursday in a briefing.

Zou Lan, director of the PBOC’s financial markets department, said banks in over 100 cities have reduced interest rates by over 20-60 bps on average since March.

Mortgage rates are required to be higher than the benchmark Loan Prime Rate for first-home buyers and 60 bps over LPR for second-home buyers, and most cities just set their local rate at the bottom level, Zou noted.

The 5-year LPR is currently 4.6%.

Policy makers will ensure the stability of land and house prices and expectations, and allow home buyers suffering the economic impact of the pandemic to defer mortgage payments, Zou said.