The People's Bank of China has announced a surprise move to cut the five-year loan prime rate (LPR) by 25 basis points, bringing it down to 3.95%. This marks the first rate decrease in seven months, signaling a proactive approach to stimulate the economy.
While the one-year LPR remains steady at 3.45%, the national mortgage rate is set to drop to 3.75%. This reduction translates to lower interest payments for both new and existing mortgage borrowers, easing financial burdens and encouraging investment.
Analysts believe this move will not only save interest costs for homeowners but also promote consumption and support the real estate sector's healthy development. Bruce Pang, chief economist at JLL Greater China, highlighted that reducing financing costs can stabilize the yuan's exchange rate and balance economic recovery efforts.
China Minsheng Bank analysts Wen Bin and Zhang Liyun noted that the unexpected rate cut is likely to boost demand, stabilize the real estate market, and prevent a surge in early mortgage repayments. They see this policy as a positive indicator for market confidence and a step towards achieving a \"soft landing\" for the real estate industry.
Overall, the reduction in LPRs sends a strong positive signal to the market, enhancing confidence and fostering a stable economic environment.
Reference(s):
China announces greater-than-expected key mortgage rates cut in Feb.
cgtn.com
