BEIJING (Reuters) – Banks in nearly 90 Chinese cities cut mortgage rates in February, a private research group said, in a bid to boost sales in a residential property market chilled by a prolonged liquidity crunch for many developers.
Mortgage rates in 87 out of 103 cities surveyed by Beike Research Institute have come down, with 30 of them, including Beijing, leading with cuts of 5 basis points on average, in line with a similar decline in the five-year Loan Prime Rate (LPR) in January, the group said in a report published on Monday.
The mortgage rate reductions by commercial lenders followed two rounds of cuts in the benchmark LPR by the central bank in December and January, aimed at shoring up slowing growth in the world’s second-largest economy.
“Mortgage rates in Beijing and Shanghai fell for the first time month-on-month since mid-2020,” said Xu Xiaole, an analyst at the institute, adding that there was more room for cuts.
China’s four biggest banks lowered mortgage rates in the southern city of Guangzhou by 20 basis points on Monday, sources told Reuters.
Mortgage rates in smaller cities such as Hohhot, Zhongshan and Huizhou were cut by 30 basis points, according to the Beijing-based institute.
“This change of policy does not mean the government already gave up the long-term goal of ‘houses are for people to live in, not for speculation’,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“Once growth stabilises in the second half and the important government meeting ends in the fourth quarter, the priority will likely shift back to the long-term objective,” Zhang said.
The ruling Communist Party is set to hold its once-in-five-years congress late this year.
Since late 2021, authorities have taken a slew of measures to avert a hard landing for the property sector, including steps to support buyers such as newly married couples.
Last week, some banks started to require smaller down-payments in a handful of cities not constrained by regulatory restrictions on purchases.
The People’s Bank of China did not immediately respond to a Reuters request for comment.
In January, China’s new home prices rose for the first time since September on a monthly basis, official data showed on Monday, partly driven by improved demand in the biggest cities.
(Reporting by Liangping Gao, Yan Zhang and Ryan Woo; Editing by Robert Birsel)
