China's major commercial banks, including the Industrial and Commercial Bank of China, Agricultural Bank of China, the Bank of China and China Construction Bank, announced on Saturday that they plan to cut some of their existing mortgage rates starting October 25.
Mortgage rates that currently exceed loan prime rate (LPR)-30 basis points (BP) will be reduced uniformly to LPR-30BP. Both first- and second-home mortgage rates will be adjusted. Meanwhile, those mortgages already below LPR-30BP are not subject to adjustment, according to the banks.
Take a mortgage with the amount of 1 million yuan ($141,518) lasting 30 years on an equal loan payment. A borrower could save a total of around 61,000 yuan in interest following the latest adjustments.
Commercial banks said on Saturday that the mortgage rates will be adjusted automatically by the banks, and no individual applications are required from customers.
The Saturday move came after China's central bank, the People's Bank of China (PBOC) previously announced that the mortgage rates for first homes, second homes and more are to be reduced by at least 30 basis points below the LPR by October 31, 2024.
The adjustment aims to bring the rates of existing loans to be in line with the national average for newly issued mortgages, thereby reducing the interest burden on borrowers, the PBOC said.
China's central bank and the Ministry of Housing and Urban-Rural Development recently introduced a range of policies to ease the financial burden on property owners and bolster public confidence.
The ministry said on September 29 that it will support cities, especially first-tier cities, to effectively leverage their independent real estate market regulations and adjust restrictions on housing purchases based on local conditions.
The set of stimulus measures came after a recent meeting by the Political Bureau of Communist Party of China Central Committee emphasizing efforts to reverse the downturn in and stabilize the real estate market.
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