China’s central bank has cut its mortgage rate threshold for first-time homeowners by 20 basis points, according to Bloomberg.
The minimum mortgage rate is reduced to 20 basis points below the corresponding base loan interest rate, the de facto borrowing reference rate, the People’s Bank of China (PBOC) said in a statement. The five-year LPR, which is a benchmark for mortgages, is 4.6%, after banks reduced it by five basis points in January.
The change is aimed at supporting housing demand and “promoting the sustainable and healthy growth of the real estate market,” the People’s Bank of China said, adding that “housing is for living, not for speculation.” The minimum mortgage rate for second home buyers remains unchanged.
The cut follows a slump in household borrowing, according to official data released on Friday, with mortgages shrinking by 60.5 billion yuan ($ 8.9 billion) in April. Home sales continued to fall in all major cities in early May, as combined sales of the top 100 builders fell by half in the first four months of the year.
The People’s Bank of China said it would instruct banks in each city to set their own minimum interest rates in addition to the national requirement. Banks in more than 100 cities have cut mortgage rates by 20 to 60 basis points since March, officials said in April.
Source: Capital
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