A slew of major cities across the north of China have seen rates for first home loans fall in response to a central bank directive permitting them to sink beneath benchmark levels.
Banks in the Henan province capital of Zhengzhou, the Shandong province capital of Jinan and the province-level municipality of Tianjin have recently cut first home loan rates to a minimum of 4.4%, according to reports from state-owned media.
The reductions arrive just after the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) issued a directive on 15 May stipulating that the floor on first home loan rates would in future be no less than the loan prime rate (LPR) for loans of corresponding maturities minus 20 basis points.
Given that the current five-year LPR is at 4.6%, the reduction of first home loan rates to 4.4% is in line with the directive.
“We can see that banks have actively and rapidly transmitted the central bank’s weekend policy from 15 May, demonstrating the rapid implementation of central bank policy, the rapid implementation of accompanying policy guidance, and demonstrating the extremely fast pace of policy execution,” said Yan Yuejin (严跃进), a researcher from Shanghai Yiju Real Estate Research Institute (上海易居房地产研究院).