China News Service, Beijing, February 20 (Reporter Pang Wuji) China’s mortgage interest rates are expected to be cut more than expected.
On the 20th, the People's Bank of China authorized the National Interbank Funding Center to announce the latest loan market quoted interest rate (LPR): 1-year LPR was 3.45%, unchanged, and 5-year and above LPR was 3.95%, lower than last month 25 basis points. This is the second decline in LPR over 5 years since June 2023, and it is the largest decline in LPR ever.
Yang Chang, chief analyst of the policy group of Zhongtai Securities Research Institute, pointed out that this asymmetric interest rate cut reflects the policy intention of monetary policy to coordinate with the stable start of the economy. After the Spring Festival holiday, work will be carried out from the capital supply side to reduce loan interest and financing costs to coordinate with the stable start of the economy in 2024.
In addition, the asymmetric reduction of interest rates of different maturities indicates that the policy is focused on the targets it hopes to play a role in. Yang Chang pointed out that since the correlation between LPR of more than 5 years and the real estate market is relatively strong, from the early stage, lowering the interest rate of LPR of more than 5 years is also part of the demand-side policy package of the real estate market. At this stage, the significant reduction of 25 basis points in LPR interest rates over five years, combined with the recent intensive introduction of many policy measures around the real estate market, fully reflects the policy intention of interest rate policy to participate in activating the real estate market and promote a virtuous cycle in the real estate market.
Pang Ming, chief economist and director of the research department of Jones Lang LaSalle Greater China, told a reporter from China News Service that the asymmetric reduction of LPR over five years was slightly higher than market expectations. Taking into account the changes in LPR over the past four and a half years, before this reduction, the cumulative reduction of LPR over 5 years was generally less than the 1-year LPR, and there is a certain necessity and possibility of catching up. On the other hand, real estate still needs financial support from the sales end to the investment end, from the supply side to the demand side. Coupled with the optimization and adjustment of real estate policy stance, an asymmetric reduction of 25 basis points in LPR over 5 years is expected. Outside and within reason. (over)