Multiple banks in China have made batch adjustments to the interest rates of existing personal housing loans starting on Friday.
It is estimated that the batch adjustments will benefit 50 million households and 150 million people across the country, reducing the total amount of household mortgage loan expenses by about 150 billion yuan (about 21 billion U.S. dollars) on average each year.
In many parts across China, many existing mortgage loan borrowers could see the adjusted mortgage interest rates through their banking apps on mobile phones on Friday morning.
"We can see on the app that the mortgage interest rate has indeed been adjusted. I remember that it was 4.5 percent before, and now it is 3.65 percent. The monthly payment was more than 3,500 yuan (about 491 U.S. dollars) before, and after the adjustment, it will be around 3,200 yuan (449 U.S. dollars) in the next installment period, basically a decrease of about 300 yuan (about 42 U.S. dollars)," said a resident in Beijing.
The interest rates on existing mortgage loans were adjusted in batches by the banks, and customers do not need to make applications.
Except for loans in Beijing, Shanghai, Shenzhen and for second home loans, the interest rates of other eligible mortgages will be adjusted to LPR-30 basis points below the Loan Prime Rate (LPR).
The LPR is the most preferential lending rate offered by a commercial bank to its prime clients, and serves as a reference for other lending rates across the economy.
As of 10:00 Friday, China’s six state-owned banks and several joint-stock banks such as Industrial Bank and China Zheshang Bank have completed the adjustments in most regions. While the small and medium-sized banks announced to complete the adjustments before the end of this month.
The People's Bank of China (PBOC), the country's central bank, on Monday announced to cut the market-based benchmark lending rate, with both the one-year LPR and the over-five-year LPR being lowered.
The over-five-year LPR, on which many lenders base their mortgage rates, fell to 3.6 percent, reduced by 0.25 percentage points from the previous reading, according to the National Interbank Funding Center. The reduction in LPR means the monthly payments will be further reduced for loan borrowers, further alleviating the pressure.
Chinese banks make batch adjustments on interest rates of existing home loans
