China on Tuesday cut a key reference rate for mortgage loans, as policymakers attempted to stabilise the crisis-hit property market as well as the national economy.
The five-year loan prime rate (LPR), which commercial banks use as a benchmark to adjust their mortgage rates, was lowered from 4.2 to 3.95 per cent, said the People’s Bank of China.
It marked the largest rollback of the five-year LPR since the system was introduced by China’s central bank in 2019.
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The move is set to further lower household burdens and also boost home purchases.
China’s housing mortgage loans totalled 38.2 trillion yuan (US$5.3 trillion yuan) at the end of December, government data showed.
Meanwhile, the one-year LPR – an indication of market lending rates – remained unchanged at 3.45 per cent.
China has already rolled out various measures to shore up its failing property sector.
An urban real estate financing coordination mechanism has been set up in more than 100 cities to strengthen coordination between local governments and housing departments and support the financing needs of real estate projects.
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Credit to real estate projects exceeding 160 billion yuan (US$22.2 billion) has been extended under the mechanisms, state broadcaster CCTV said on Tuesday.
Last year, the sales area of commercial housing stood at 1.12 billion square metres (12.06 billion sq ft), representing a decrease of 8.5 per cent from the previous year, with the residential sales area dropping by 8.2 per cent, according to the National Bureau of Statistics.
The sales revenue of commercial housing, meanwhile, fell by 6.5 per cent to 11.66 trillion yuan, with residential sales decreasing by 6 per cent.
More to follow …
