China announced on Monday it had slashed a key reference rate for mortgage loans by a quarter of a percentage point, as the country stepped up efforts to stabilise the property market.
The benchmark five-year loan prime rate (LPR) was lowered from 3.85 per cent to 3.6 per cent, while the one-year lending rate was also cut from 3.35 per cent to 3.1 per cent, according to the People’s Bank of China.
For Chinese households with mortgage loans of 1 million yuan (US$140,000), the monthly instalment payment would be reduced by around 141.5 yuan (US$19.9) after the cut to the five-year LPR, according to calculations by Chinese media.
The move was expected as central bank governor Pan Gongsheng had said at a financial forum on Friday that lending rates would decrease by between 20 to 25 basis points.
“The rate cut is broadly in line with market expectations,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
Read More: China cuts key mortgage rate, ‘encouraging sign’ amid push to stabilise property