China Maintains Benchmark Lending Rates Amid Real Estate Policy Shifts
China’s central bank announced on Monday that it will keep its benchmark lending rates unchanged in May. The one-year Loan Prime Rate (LPR) remains at 3.45 percent, and the over-five-year LPR stays at 3.95 percent, according to the National Interbank Funding Center.
The decision comes amid significant policy shifts in the real estate sector aimed at boosting the housing market and fostering sustained development. Last Friday, authorities introduced a series of measures designed to invigorate the sector.
Zou Linhua, a researcher at the Chinese Academy of Social Sciences, observed a decreasing correlation between the over-five-year LPR and mortgage interest rates. “The abolishment of mortgage floor rates creates room for cutting mortgage rates and further reduces the minimum down payment ratios,” Zou stated.
She emphasized that these changes could positively impact the housing market by stabilizing prices, balancing supply and demand, and improving market expectations. “It can play a positive role in stabilizing housing prices, balancing supply and demand, and improving real estate market expectations,” she added.
Zou predicted that mortgage rates are expected to fall to around 3.4 percent in most cities across China. However, she noted that cities already at this level have limited room for further reductions.
The unchanged LPRs reflect the central bank’s cautious approach amid ongoing efforts to support economic growth while managing financial risks. The LPR serves as a market-based benchmark for lending rates, influencing corporate and household borrowing costs across the economy.
Reference(s):
cgtn.com
