China slashed a key reference rate for mortgage loans by 10 basis points on Tuesday amid efforts to stabilise the property market, but analysts said the moderate cut was still insufficient to revive a sector mired in a downturn.
The five-year loan prime rate (LPR), which commercial banks use as a benchmark for their mortgage rates, was lowered from 3.6 per cent to 3.5 per cent, according to the People’s Bank of China.
The one-year loan prime rate, the reference rate for corporate loans, was also cut by 0.1 percentage points to 3.0 per cent.
The reduction followed the central bank’s announcement earlier this month to cut the seven-day reverse repo rate – a benchmark interest rate – by 10 basis points to 1.4 per cent, which central bank governor Pan Gongsheng said would likely lead to a similar drop in the mortgage reference rate.
The first cut since October came amid Beijing’s broader efforts to revive China’s property market, which has been a long-standing drag on the economy after solvency issues emerged among several major real estate developers.
Beijing has placed particular emphasis on the sector this year while seeking to boost domestic demand and ensure economic stability amid heightened external risks under Donald Trump’s second presidency.